Inventories – the complete guide

In an ever-changing lettings industry, shaken by the impact of coronavirus and with more regulation on the horizon, property inspection reports and inventories remain a vital part of the rental process for letting agents, landlords and tenants.

During these uncertain times, the need for clarity and transparency at the outset of a tenancy is arguably more important than ever. A sharp, robust inventory should therefore be at the forefront of any tenancy to safeguard the interests of both tenants and landlords. While the majority of landlords are good and most tenants treat their rental properties with respect, even successful tenancies often end in a discussion over the condition and cleanliness of the property. This is where check-in inventories, mid-term inspection reports and check-out reports will be the primary pieces of evidence for negotiating.

In this guide, we’ll look at why you need an inventory, its significance at various stages during the rental process, and how to make sure you have a robust inventory if you need it to support the negotiation. We’ll also provide our top tips to help safeguard both the landlord or agent and tenant to manage everyone’s expectations throughout the tenancy.

Free inventory checklist

Our inventory checklist is designed to help make sure that you have covered all areas in your inventory report.

What is an inventory?

A quality check-in inventory is a comprehensive list of the property’s contents and areas, together with a detailed description of their condition, and the standard of cleanliness throughout. The check-in inventory should also include good quality photographs which, if not embedded in the report, should be time and date stamped.

It’s important for the tenant to see the report and agree to its content as soon after they’ve moved in as possible. Some landlords/agents will do this by visiting the property with the tenant to make sure there are no obvious differences. Most commonly, reports will be sent digitally and tenants are usually given up to seven days, from moving in, to report any differences.

This report is the basis for everything that comes after it, when looking at how a tenant has lived in, and looked after, the property and any changes that have taken place or are found during mid-term inspections and when the tenancy ends, at ‘check out’.

Why is an inventory so important?

You’d be surprised how much damage a tenant can cause or how unclean a property may have been left, but our team of adjudicators has seen it all! Whether the damage involves stains on carpets, broken windows, burns on worktops, holes in walls or broken doors, the list goes on –

read our case study for examples. With no check-in inventory, a landlord is immediately on the back foot in any end of tenancy negotiation to recover any costs from a tenant.

A good inventory will support any reasonable claim and help to avoid a formal resolution being needed when the tenancy ends.

Top tip – no inventory means no comparison can be made to show that the extent of damage or lack of cleaning being claimed was caused by the tenant.

Why are mid-term inspections valuable?

Regular inspections during a tenancy can highlight any new or on-going problems which may be the tenant’s or landlord’s responsibility.

Examples would be:

  • a leak in the property which the tenant reported as soon as they discovered it. The landlord agrees and sorts the leak out straight away, but the damaged décor remains until the end of the tenancy. As the leak was assessed as no fault of the tenant’s, the residual damage would be the landlord’s responsibility and no claim from the tenant could subsequently succeed
  • washing found being dried on radiators in rooms which are poorly ventilated. The tenant was advised how to avoid the build-up of condensation and mould developing. This advice was followed up by the agent, but the tenant chose to ignore the advice. The check-in and mid-term inspection reports together with the written advice given to the tenant would support a claim from the deposit Some tenancies are long, with some having no fixed end date. This makes regular inspections during the tenancy even more important. Without these, a property can deteriorate to a greater extent than any deposit amount

What happens when a tenant moves out?

A check-out report should be carried out, using the same format and terminology as the check-in report, so that the two reports can be compared. Another option at check-out is to do a ‘schedule of the differences’, which will just record the end of tenancy changes against the check-in report (another reason for the check-in report to be thorough). Either way, these should use short, descriptive words about the condition and cleanliness that highlight any differences from the original report.

Photographs or videos should be included to support the descriptions and be taken from the same angle as those in the check-in inventory, plus any others that clearly show damage or deterioration.

Even if no deposit was taken, the landlord or agent will need to prove that the tenant is responsible for any damage, missing items or cleaning-related costs at the end of the tenancy. Both negotiation and formal resolution rely on the quality of inventory and check-out inspection reports to help identify changes throughout the tenancy.

When negotiating and proposing settlements at the end of the tenancy it is important for everyone to understand that the landlord or agent is not entitled to compensation which will lead to the property being improved at the tenant’s expense. Whatever settlement amount is

proposed must be reasonable and relative to the damage the tenant has caused and must consider fair wear and tear.

Suzy Hershman, Resolution Department Lead at mydeposits, offers help to landlords and agents with understanding and assessing fair wear and tear using certain criteria – read our guide, ‘Wear and tear- what is fair?’ for more information, ,

When the damage is more than wear and tear, negotiation will be the next step.

Thinking about negotiation?

Being fully prepared by making sure you have all the evidence to hand is key to good negotiation, and the inspection reports will be the most important evidence. Managing everyone’s expectations at this point is the basis to start from – does the tenant understand what their responsibilities were and what they did not do, or is the landlord looking to replace something at full cost to the tenant without considering reasonable wear and tear? These are good starting points to discuss and think about.

Suzy adds, “Wear and tear is a topic that is open to interpretation and is decided on a case-by-case basis depending on the facts. Giving your tenants good advice, managing the relationship and everyone’s expectations throughout, together with having quality evidence will reduce the likelihood of a formal resolution. Key to all of this is being prepared before starting the discussion and being prepared to listen and be open to compromise.”

What happens if the negotiation is unsuccessful?

While negotiation between landlords or agents and their tenants is successful most of the time, there is still a minority of tenancies, with either a protected deposit, or an alternative product in place, which require our more formal resolution services to reach an independent and impartial decision. You can find out more about how the mydeposits formal resolution process works here.

Are independent inventory reports better than those conducted by landlords or agents in the event of a formal resolution?

This is a common question from both landlords and agents.

An independent inventory is what it says on the tin! The report will be independent and impartial and carried out by a qualified inspection clerk, if the inventory company/clerk is accredited. These reports are usually well laid out, detailed, include good quality photographs and will always use the same terminology.

In the digital world we live in, some landlords and agents choose to carry out inspections and provide their own reports.

There are two main points for any inspection reports:

· Can the landlord or agent prove that the tenant was sent, or handed, the check-in inventory report on moving in and had the opportunity to make any amendments?

· Is the quality, detail and description good enough to negotiate with at the end of the tenancy?

If the answer to both points is yes, then either report will be good evidence for our resolution service to make a decision.

Any inventory can be provided which fits the above criteria. While we must remain independent and do not recommend any one inventory provider over another, it is worth checking what’s out there to make sure you are protecting all parties and offering the best service possible. We are partnered with No Letting Go, an organisation that can offer both independent inventory services or software for landlords and agents to create their own property reports.

Next, we dive into the details of carrying out a quality inventory and the most important requirements.

Inventory essentials – top tips

This list is a guide to the ‘must haves’ in a report which all help to protect both the landlord and tenant and manage everyone’s expectations throughout the tenancy. If using an independent third party for your reports, make sure they are giving you the quality report you need.

Remember to:

  • list each item and area in the property with details of its condition and the standard of cleanliness throughout. Tip: Condition and cleanliness are two separate things, with fair wear and tear applying to condition only. Tip 2: Create a front page summary and include a line for ‘smells’ (“any evidence of smells at check-in”). This will give you a comparison point for check-out
  • include photo and video evidence which supports the written description – referencing each area that they relate to, if not on the same page. Tip: Take photos at check-out, from the same angle as they were taken in the check-in reports, and use a measure (such as a ruler or finger length) to show the size and ratio of, for example, scuffs on walls and marks on carpets
  • date the reports and, if they are only photographic or video reports, make extra sure the time of the inspection is clear. Note: This especially applies to student properties and blocks where the décor and contents are identical and where turn-around times can be super quick
  • keep the terminology used the same when describing something on both check-in and check-out reports. Tip: Descriptions can be short, yet explanatory, for example, three dark stains on the carpet, and several furniture indents, worn throughout. DO NOT rely on ‘good’ ‘poor’ ‘excellent’ or just use tick boxes
  • define any of the terms or abbreviations used within the documents for consistency. Tip: Think about using a number to reference each item. This makes it easier to cross-reference any item or area at a property visit or final inspection
  • make sure any photos, not embedded in the main report, are digitally dated. If not, these should be sent to your tenant who can initial and date them separately to verify them. Tip: Check the date is set correctly on your phone, device or camera settings
  • carry out mid-term property inspections and underestimate their value. Tip: These can help build a clear picture of what happened during the tenancy when it comes to discussing responsibilities and any associated costs at the end
  • send all reports to the tenant who, in an ideal world, will sign them to confirm receipt. However, when it comes to negotiation or adjudication, you will need to be able to evidence that the tenant received the check-in report and had the opportunity to comment and make any amends. For example, a time and date stamped email or a declaration form when they took the keys. It is generally more acceptable for the check-out report to be sent to the tenant but not necessarily signed
  • make sure check-in reports are completed before the tenant moves in, and check-out reports are completed after the tenant has moved out all their belongings, making sure there are no long gaps between these two events

So now you are prepared for all eventualities, with a comprehensive check-in inspection report, any mid-term inspections and a thorough check-out inspection report.

These are the best starting tools for any end of tenancy negotiations, offering you the ability to compare these reports from the start, during and end of the tenancy. These give all parties the best opportunity to agree on who is responsible for what when the tenant moves out and avoid the prospect of a formal resolution being needed.

We also have our ‘Ins and outs of inventories’ checklist, designed to help landlords, letting agents and tenants avoid formal resolution by making sure that you have covered all areas in your inventory report.

Finally, it is always best to be prepared for the unexpected and sometimes things go wrong, even when everything has been done properly. The best precaution for all landlords is to take out landlord insurance, which protects the property owner against financial losses related to their rental property.

Total Landlord, which like mydeposits is powered by Total Property, offers award-winning landlord insurance and has been providing comprehensive cover for landlords since 1996. If you are a member of mydeposits, visit our insurance partner page to find out more and receive an exclusive discount of 15% off landlord insurance with Total Landlord.

Visit Total Landlord’s Knowledge Centre for a comprehensive library of guides, articles and podcasts to help you navigate the complexities of the private rented sector.

Further reading from Total Landlord related to this mydeposits guide:

End of tenancy cleaning checklist for landlords and tenants (includes a tenant checklist)

The ultimate guide to inspecting your property

The ultimate guide to a landlord inventory and schedule of condition