ABSOLUTE BEGINNERS – INVENTORY
How to Prepare an Inventory.
New and old landlords should be aware of the imminent changes proposed by the forthcoming Tenancy Deposit Scheme (TDS) to be introduced from April 6th 2007. This will make the preparation of an accurate inventory and schedule of condition more important than ever.
To help make sure landlords prepare a fully comprehensive and TDS compliant inventory Property Hawk will be producing its’ own FREE downloadable inventory before the legislation takes effect.
Make sure that you register to ensure that you can download your copy. We have also produced our detailed guide on How to prepare an inventory which is available within the Lettings section of the Landlords Bible.
Below is a brief extract on what you need to do to produce one.
What is an inventory?
The inventory is a catalogue of the property and its’ contents. A schedule of condition is a record of condition. Most commonly the two are combined into one report and are called either the inventory or schedule of condition.
The inventory/schedule of condition has several functions:
- it is a catalogue of the property being let
- it records the condition of the property and any items that are included in the tenancy
- it forms part of the legally binding contract that is set out in the tenancy agreement between the tenant and the landlord.
How to prepare an inventory
The most essential thing about preparing an inventory is to adopt a system that is simple so that it is easily remembered and replicated. This will ensure that you achieve consistent results. In developing your system ensure that the inventory it produces is:
- Ordered – this way when preparing it you are less likely to miss things and also that anyone reading it can easily follow the contents.
- Comprehensive – remember this will be the document of reference should a dispute a rise and could potentially end up in front of the judge
- Verifiable – its accuracy can be agreed by anyone with few or nil additions or alterations.
- Written in Plain English – so it is easy to read and understand. This will help should the case go to court when a clearly written unambiguous report will have more credibility than one where a tenant could claim that they were unsure what they were signing. This shouldn’t be a defence but judges are only human.
The best way of producing inventories that achieve the key points given above is to divide any property into a series of rooms. This is largely straight forward; for instance most properties will have a kitchen, lounge, bedrooms, etc. However you will also have to categorise some parts of the property as a room such as hallways, a conservatory, gardens, garages, etc. Once you have established a list of these rooms; it is then a case of subdividing them into a series of component parts. These component parts once categorised will build up an overall framework. The standard component parts used in the Property Hawk inventory are as follows:
- Light fittings
- Wood work
As well as the standard component parts each room may have individual parts specific to that room; these must also be noted down. Once all these parts have been recorded, the next stage is to record items that are not fixtures or fittings. This is particularly important and time consuming where a property is furnished. In this case it will be necessary to note down every item supplied. Once this is done; you will have a complete inventory.
The next stage is to complete what is known as the schedule of condition. This can be carried out concurrently with the inventory. The object of the process is to note down the condition of each component part. For example, in the case of the lounge under the component part of doors you would record the fact that there are two doors, newly white painted with chrome handles. This part of the process is particularly important because as I go on to discuss later it is disputes over the condition of items and what is ‘fair wear and tear’ that are the most common. This aspect is far more difficult to prove than the removal of an item and it is fair to say that judges will often side with the tenant unless the landlord can prove conclusively that it was new or in good condition. This highlights the importance of retaining receipts not only for tax purposes but also in case of a disagreement with your tenant resulting in arbitration or court action where you will then have to prove the condition of your property at ‘handover’.
Many inventory clerks use a series of abbreviations to speed up the process. This is fine providing that a full list of terms accompanying the inventory. Whilst abbreviations are useful they can also be confusing for the tenant who will need to verify the report once it is completed.
The important things to ensure are:
- That there is an adequate description of each item so that they can be verified
- That an accurate statement of condition accompanies each component item
You should avoid at all costs ambiguous language such as ‘spotlessly clean’ or emotive language so as ‘lovely fireplace’. Keep descriptions brief and factual.
If you follow these guidelines then you should end up with a comprehensive written inventory and schedule of condition that will then cover you for all eventualities.
For more details about preparing your own TDS compliant inventory go to the Lettings section in the Landlords Bible.