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  • Buy-to-Let

    No inventory? You are giving your tenant an unfair advantage!

    We recently produced the below video for the digital inventory app, Imfuna.

    It's with Mike Morgan, Head of Adjudications at the TDS. I wanted to share it because he makes some very important points about inventories in general and gives actual examples of disputes and outcomes. It certainly made me realise just how important inventories are.

    They seem to be largely under-valued by landlords, but as this video states, it is in your tenant's interest NOT to have an inventory, as they are more likely to win a deposit dispute!!



    Also worth remembering that an inventory proves what wasn't in the property at the start of the tenancy, as much as what was!

    I heard a recent case where a tenant removed all the designer furniture from a house and replaced it with stuff from charity shops!

    As the landlord did not have an inventory, he could not prove that this was different furniture to the start of the tenancy! I also used my inventories as proof to HMRC that our properties were furnished when we went through our recent HMRC audit.

    They accepted them as evidence that we had made justified "furnished allowance" claims.

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    There is a monthly Digest on the TDS website which gives examples of real life adjudications, and a few of them bring up the importance of inventories.

    https://www.thedisputeservice.co.uk/resou...1-2012.pdf <<< In this case about damage to items, the landlord provided a vague check in and no check out, meaning the Adjudicator had no way to compare the condition at the start and end of the tenancy - the tenant was awarded the full amount.

    https://www.thedisputeservice.co.uk/resou...y-2011.pdf <<< And this is quite an interesting case about valuable artwork belonging to the landlord which was damaged during the tenancy, but not well documented at the outset. The tenant was awarded most of the deposit.
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    Both of these make me ask more questions than just the inventories.

    In the first case it read as if the agent did not care what the outcome was and was just going along with the process so that could pass the blame to someone else.

    In the 2nd case, why was art work of “special worth” left in a property when the tenant did not want it to be so? Also I can’t see how the landlord could reasonably consider the painting to be worth more than a few pounds, as that is all that would have to be sent on a painting to “stage” a room, I don’t see any other reason to provide a painting.

    Good inventories are clearly of benefit to all parties, however it is just as important that a property is prepared in a way that minimise the likely issues and that the agent does care about the landlord.

    (14-12-2012 04:33 PM)chris@tds Wrote:  There is a monthly Digest on the TDS website which gives examples of real life adjudications, and a few of them bring up the importance of inventories.

    https://www.thedisputeservice.co.uk/resou...1-2012.pdf <<< In this case about damage to items, the landlord provided a vague check in and no check out, meaning the Adjudicator had no way to compare the condition at the start and end of the tenancy - the tenant was awarded the full amount.

    https://www.thedisputeservice.co.uk/resou...y-2011.pdf <<< And this is quite an interesting case about valuable artwork belonging to the landlord which was damaged during the tenancy, but not well documented at the outset. The tenant was awarded most of the deposit.
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    Very useful pointers. I have just asked my agent to check that we have clear inventories for the tenant.

    I'm pretty sure they have as they are diligent, but it never hurts to check :!!

    Colin
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    Ian makes a good point. A property should be fit for purpose and that includes assuming wear and tear from the tenant. Many landlord will state that when they rent a car or a hotel room they treat it with less care than if it was their own property. No intention to do damage and yet more likely it will happen.
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    Regarding inventories and letting agents… Here’s an interesting one … I have a number of BTLs and one of them is a 200mile round trip for me so use a letting agent to fully manage. This has been the case for approx. 7 years. I have never once seen an inventory, this is until my latest tenant moved in. Then I realised some of my furniture was missing. With a value of about £650 I contacted the agents asking where the furniture was, when it went missing and why wasn’t it picked up. Cut a long story short, I have now appointed a solicitor to reclaim my lost money as the agents have not been able to produce any previous inventories or state when my belongings disappeared. They offered me £120 as compensation and you can guess my response!!! They lack of communication, huge delays in any responses and general attitude has left me no choice but to pursue matters. I suspect I won’t see my full £650 and then it will be minus legal fees… I have 5 properties and this is my first encounter of this kind since I started as a landlord in 2001. The way I see it, I will only be letting unfurnished (apart from my holiday let in France) and will ALWAYS ask for check-in and check-out inventories/reports before any deposits are paid back to the tenants…

    LESSON LEARNT!

    Regards

    Paul

    UPDATE SINCE I WROTE THIS...

    I have received £120 from the management agents and they also admitted & apologized. As a result they have lowered my management fee by 2%.
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    I really would not look on this as a satisfactory result. Lowering there commission means that they have less to work with so may well cut corners elsewhere. Use a ARLA agent so that you can always use there complaints procedure or a TPO so that you can save on possible legal fees

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    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724

    I dont do inventories. My tenants often improve my properties so any dispute over a deposit ( if I take one) would probably be about me paying them more when they leave for all the extra work they have put in.
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    Jonathan Clarke. http://www.buytoletmk.com

    @Paul

    Welcome to Property Tribes and thank you for sharing your story as it shows the importance of the inventory.

    I would have lost trust with the lettings agents after this experience though and I don't think that they have compensated you enough for your furniture and by discounting their poor service!

    After this, I would definitely consider moving to a better agent because, if they are not on the ball with this, what else are they not dealing with to professional standards?

    [Image: house.png]Related content:

    Questions to ask to vet a lettings agent
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    Many Thanks, Vanessa!

    I have since been in touch with the agents as my current tenancy agreement expires next month. For me to keep the tenant in the house (she wants to stay!) and to fully manage the property myself, the agents want 12 months upfront fees from me....!
    FYI - below is a response from the letting agent....they certainly talk a good talk but the bottom line is, I'm out of pocket and given the reduction in management fee (by 2%) it would take 2.5 years to recoups my loses! If I pay them their "get out" few it would also take me about 2 years to be in profit. That said, the tenant has stated she wishes to stay as long as I'll have her there and so within 2.5-3 years I will be showing a profit!!!

    Dear Mr Willetts

    Thank you for your email of last week and I apologise I have not been able to respond sooner. for some reason, your email should have been in my follow up system but was not flagged up for me to respond. I fully appreciate that Inventories should be undertaken before and after every Tenancy and that as part of our Management we should ensure this is carried out. Unfortunately we do not have a record of the check out report from 2008 and therefore unable to conclude whether this was conducted or not. I would suggest that this was perhaps overlooked, hence not discussing the missing furniture with you at the time. Again, I apologise for this matter as I fully appreciate it has resulted in our discussions regarding the missing furniture.

    I therefore accept that we failed to provide an acceptable level of service in this regard, however I believe as mentioned to you as far back as 2011 if we were looking to recover these items from a Tenant we would only be able to claim a proportion of the cost dependent on the age and cost. We are therefore looking at the same situation as we accept the liability in not ensuring the furniture remained in the property. We have therefore concluded that as these items would be sold second hand on sites such as Gumtree and eBay this would be a reasonable level of compensation in this regard.

    I do however note that you have spoken to various people before it came to me and a satisfactory conclusion has never been reached, nor indeed have you had an acceptable level of communication, mostly due to staff changes. In addition to this you have experienced other issues in respect of the management of your property, notably rent arrears letters being sent when they are not due. I would therefore propose that in addition to the previous compensatory figure mentioned regarding the furniture we also reduce your Management fee to 8% ongoing for this tenancy.

    I do hope this shows that we see you as a valued client and whilst we do accept that the lack of inventory has resulted in the missing furniture, we are offering the same level of compensation that we would have been able to claim from the Tenants deposit had this been picked up by an inventory at the time.

    I look forward to hearing from you in the hope that we can now conclude this matter and ensure the compensation figure is forwarded to you without delay.

    Kind regards
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    Interesting tweet on this topic:

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