Landlords in the UK are out of pocket to the tune of over £5bn every year because of damage to property and unpaid rent.
Tenants’ rent arrears account for around £900m in costs annually, while damage to landlords’ property sees them fork out an incredible £4.5bn.
Research shows that broken appliances are one of the biggest problems when it comes to property damage. Damage to carpets and decorating is also prevalent, while cigarette burns remain an issue – despite many rental properties not allowing smoking inside. Over a third of the landlords surveyed also stated lack of cleanliness as a common concern.
According to the latest TDS stats, property damage is the second most common cause of disputes (52%). Historically, many tenant disputes have gone in favour of tenants, as there was simply not enough evidence to support the landlord’s or agent’s damage claim. Many landlords and agents feel tenants are not held to account when damage is caused and that there is little they can do to protect their property. Furthermore, landlords and agents have a poor record in winning tenant dispute cases.
So, how can landlords and agents protect themselves from costly damage?
Firstly, it is so important that landlords and agents carry out background checks on potential new tenants.
Picking the right tenant can save landlords and agents from a long, costly eviction process further down the line. Be thorough in conducting background checks and reference gathering, including bank statements for the past three months, previous landlord and agent references to check the tenant paid rent on time and credit checks, incorporating fraud indicators and employer references. Check identity and proof of current address – ideally tax or insurance documents – and talk at length to a prospective tenant.
Secondly, landlords and agents should make regular interval inspections (at least every three months) to record the condition of the property and arrange repairs for any damage or wear and tear as soon as possible. Normally, visits should be arranged for a convenient time for the tenants and landlords and agents should give at least 24 hours’ notice. However, entry can be made without notice for emergency repairs (e.g. in the case of flooding).
Landlords and agents should ensure that the lease agreement also gives them a reasonable right of access to inspect the state of the property and to provide any agreed services (e.g. cleaning or gardening).
Finally, landlords and agents need to protect themselves at the start, during and at the end of a tenancy agreement, ensuring that there is a professional inventory, check-in and check-out. The best way for landlords and agents to protect their property and avoid a dispute is by ensuring that the condition of the property is fully recorded at the start of the tenancy, with a comprehensive inventory, along with a thorough check-in and check-out report.
What do landlords and agents need to look out for at check out? The most important focus of a check-out is to make sure the property has been left in the same condition that it was in when the tenant moved in, allowing for reasonable wear and tear. To enable landlords and agents to do this job properly, it is vitally important that they have an inventory; the inventory must be fully detailed and supported by photographs where necessary. A check-out is very much reliant on an efficient check-in process. Without an inventory, a landlord or agent is unlikely to be able to deduct any money from a deposit, as there will be no proof as to what condition the property was in at the beginning of the tenancy.
The most common mistake in inventories is the lack of detail. Often there are not enough appropriate photographs with accompanying description to show the condition of the property and its contents. For example, many landlords and agents fail to record the condition of sinks and bathroom fittings, as well skirting, doors, floor coverings and kitchen units. If an inventory is not a professional and thorough report on the property, it is not worth the paper it is written on.
Inventory reports should note detail on every aspect of damage and its location at the start of a tenancy. Good photographs provide vital evidence and should be of a high quality when printed on A4 or A3 size paper, making any damage clearly visible.
Unless landlords and agents have a water-tight inventory, they are at risk of disputes and expensive repair bills. Our research shows that landlords and agents who have switched from analogue to digital inventories have seen their tenant deposit disputes drop by more than 300% and their success rate at adjudications improve by an average of 75%.
Normal wear and tear is a fact of life with rental properties, just as it would be at home; but if landlords and agents wish to avoid the hassle of disputes over responsibility for damages, they need to prepare a thorough inventory of the condition of the property that details the condition of every item within.
There are a number of professional inventory providers, including us. We have designed Imfuna Let to ensure landlords and agents have a bulletproof inventory that records property check-in condition status and can also be used for mid-term property inspections.