Property Inventory: A Guide for Landlords

Of the many queries raised to the Home Made operations team by landlords, a significant number are on the subject of property inventory reports. One of the costliest mistakes a landlord can make is to overlook the importance of this crucial record of their property’s condition. Inventory reports are a vital tool for determining fair and transparent deductions from the tenancy deposit, and it is extremely difficult to recover costs for damages through your deposit protection scheme without them.

To explain what an inventory report is and why you need one, we have put together this comprehensive FAQ guide.

What is a property inventory report?

An inventory report is a document that thoroughly describes the condition of a rental property. The check-in report records the condition of the property at the beginning of the tenancy and the check-out report is completed as the renters move out. The end-to-end inventory process thus allows landlords to reliably compare the state of the property at the beginning and end of the tenancy and identify responsibility for any changes. Broadly speaking, an effective inventory report will provide a detailed overview of the following:

• The condition of the property: Commonly referred to as the ‘schedule of condition’, the report should include a detailed record of the overall condition of the property including any defects or imperfections in specific areas on the date of inspection.
  
• The standard of cleanliness: The report should provide an overall summary of the level of cleanliness observed in the property as well as specific details for each room and property feature (e.g if carpets and upholstery have been steam cleaned). The report should state whether the property is cleaned to a professional or domestic standard and note the quality of the cleaning. For example, the inventory might state that a property has been cleaned to a ‘good domestic standard.’ It will also appear in the report if the property has not been cleaned to an acceptable standard.
  
• The contents of the property: As you might expect, the inventory report includes a comprehensive inventory list of all the property’s contents and their condition on the date of inspection. This includes all furniture, kitchen utensils, appliances, light fixtures and fittings, and any other items.
• Any discrepancies in condition at the end of the tenancy: A check-out report should identify any damage or defects beyond fair wear and tear that have appeared during the course of the tenancy. This is done by comparison with the check-in report. For this reason, it is best to have the same clerk (if the landlord isn’t completely the inspection) complete both the check-in and check-out inventories. If this isn’t possible, the check-out clerk should be provided with a copy of the check-in report.

How does the process work?

Either the landlord or a professional inventory clerk attends the property to complete a detailed inspection. A professional clerk works room by room and takes dozens of pictures and copious notes detailing the condition of each particular area in forensic detail.

They inspect the insides of every cupboard and wardrobe, verify that any white goods and appliances are in working order, confirm the location and condition of any smoke and carbon monoxide detectors, and list the contents included with the property and note the condition of each item. Images by a professional clerk will be dated and time-stamped to confirm that they are an honest representation of the condition of the property as it was given to or received from any occupants. Depending on the size of the property, it will take an experienced inventory clerk between 90 minutes to 2-3 hours to complete a thorough inspection.

Many clerks will also include meter readings in the report and offer check-in/check-out services at no additional cost. If the clerk checks renters in or out, they will meet them at the property to exchange keys. This spares the landlord from the hassle of booking in a mutually convenient appointment time with the tenants and travelling to the property in person, which is very useful in situations where all parties work full-time.

Once the report has been completed, it is best practice to allow the renters to comment on the contents of the report and suggest reasonable amendments for the clerk or landlord’s consideration. After the report is finalised, the renters should sign the document to confirm that they accept the accuracy of its contents.

What does a property inventory report look like?  

An inventory report usually adheres to the following format:

• A general description of the condition of the property, including its fixtures and fittings, lighting, smoke and carbon monoxide alarms, meter readings, images of all keys handed over, and overall standard of cleanliness.
  
• A room-by-room schedule of condition and inventory list including the name of the area or item, a written description of its condition, and accompanying dated and time-stamped photos.
  
• A list of damages and discrepancies in the property or its contents for which the renters are liable with accompanying photos from the check-in and check-out reports (if the report is a check-out inventory).
• A signed declaration confirming that the clerk/landlord and tenants agree that the report is an accurate record of the condition of the property.

There is no particular prescribed format for inventory reports and the exact layout will vary between suppliers. Nevertheless, the core elements outlined above will always be present in a professional report. If you would like to see a sample report, you can reach out to our operations team at info@home-made.com for further details.

What is ‘fair wear and tear’?

‘Fair wear and tear’ is broadly defined as the level of deterioration in the condition of a property or item that might reasonably occur as a consequence of normal everyday usage. There is no set legal standard to determine reasonable wear and tear and its assessment is a grey area involving all parties to rely mostly on common sense. For example, if a carpet is slightly worn or frayed at the end of the tenancy this would be a result of fair wear and tear but if there are stains that were not present at the start of the tenancy would be considered damages.

The key considerations to bear in mind when assessing fair wear and tear are as follows:

• The length of the tenancy.
• The age and condition of the property and its contents at the start of the tenancy.
• The number of occupants.
• The average life expectancy of any appliances, fixtures or fittings.
• The presence of any children or pets.

A seasoned clerk will be well versed in distinguishing between damage and inevitable natural decline. If you outsource the inventory inspection to a third party then you can be confident that liability for damages has been assigned correctly.

Why do I need a property inventory?

The check-in and check-out inventory form the basis of any claims made against the tenancy deposit by the landlord. Without detailed, impartial inventory reports it is effectively impossible to successfully pursue a claim with a deposit scheme adjudicator if there is a dispute over the amount to be deducted. Without sufficiently comprehensive reports, it is extremely difficult to determine the condition of the property both at the beginning of the tenancy and the extent to which this has deteriorated over the course of the tenancy.

The importance of quality inventory reports cannot be overstated. As the onus is always on the landlord to justify their claims against the deposit, a dispute resolution service will always find in favour of the renters if the landlord cannot provide documentary evidence of any changes to the condition of the property.

Can I do a property inventory myself?

There’s no reason why an experienced landlord can’t complete a thorough inventory report without assistance from a professional clerk, and the DIY approach can help to streamline tenancy setup costs. There are plenty of resources and templates available online to assist with the process, and if you know any other landlords it is worth speaking with them to ask how they go about preparing an inventory report.

However, there are several reasons why completing your own inventory is a bad idea in practice. Many landlords (particularly if they are new to the process of letting property) may lack the professional expertise required to produce a report of the standard required to satisfy a deposit scheme adjudicator. It can also be difficult to identify every defect with a dwelling if you are very familiar with it, and some landlords struggle to assess damage objectively because of their financial or emotional investment in the property.

An inventory inspection carried out by an independent third party cannot be questioned

Who pays for the property inventory reports?

Since the introduction of the Tenant Fee Act, landlords cannot include or enforce any clause in a tenancy agreement that can only be satisfied if the renter pays for a third-party service. While previously it was the norm for landlords to pay for the check-in inventory and tenants to arrange for the check-out inventory, the landlord must now pay for both inspections.

Though it is technically an optional expense, we strongly recommend arranging a professional inventory inspection at the beginning and end of our the tenancy to all of our clients. It is a vital protective measure that will prevent you from paying through the nose if there are extensive damages to the property and a dispute regarding the proposed deduction from the deposit. When it comes to tenancy deposits, live by the mantra that ‘the onus is always on the landlord’ and ensure that you have thorough records showing the condition of your property and detailing change over time.

At Home Made, we offer a hybrid lettings solution that adds value at every stage of the rental process. With our game-changing new landlord platform, The Property Wallet, we offer London landlords exceptional tenant-find and property management services for a low monthly fee.

• Avoid expensive upfront fees and spread the cost of marketing your property with the option to pay monthly.
• Free rent collection and arrears chasing.
• Sign off and see all charges and payments in your dashboard.
• Real-time updates on marketing, viewings, and offers.

Prices start from just £50+VAT/mo for tenant-find and £60+VAT/mo for management. Alternatively, you can pay a one-off upfront fee of £1,200+VAT for our tenant-find service.

If you would like to speak with us about your property needs, contact us via our website to find out how we can help. If you're ready to get started, book your free valuation here.

Check out more of our landlord advice here and follow us on Twitter, Linkedin, and Instagram for regular updates on industry compliance standards, market insights, and Home Made company news.