The government’s decision to cap tenancy deposits at no more than five weeks’ rent where the annual rent is up to £50,000 could, according to some market commentators, lead to an increase in formal deposit disputes in the private rented sector.
The change is part of several measures designed to “make the private rental market more affordable and competitive”, the government said.
The Association for Independent Inventory Clerks (AICC), like several other organisations, is concerned that as tenants commit less money to cover damages at the start of a tenancy, they may take a more laid-back approach to the rental property, leaving landlords with more damage and repairs to deal with, resulting in a higher number of formal deposit disputes.
Assessing what constitutes fair wear and tear to a rental home is among the least understood areas of the lettings process, and one which can create much ambiguity and cause the most disputes when a tenancy ends.
Alleged property damage, cleaning and redecoration are generally among the most common reasons for a dispute between landlords and tenants, which can sometimes end up involving an adjudication service.
To help minimalise potential disputes, it is good practice to have a detailed and accurate inventory completed at the start of the tenancy, and again when the tenancy ends.
If the tenant has agreed the inventory at each stage, this reduces the potential for a dispute to arise at the end of the tenancy.
An inventory, which records the condition of the property with written notes, photographic evidence, as well as details of the contents, including fixtures and fittings, will be helpful in supporting a claim on a deposit, because if a disagreement does arise, a decision to resolve the matter will be based on the evidence provided by both the landlord and the tenant.
Failure to provide suitable evidence, such as an inventory, in support of a claim, may affect the outcome of the dispute.
Daniel Zane, chair of the AIIC, warns landlords of the dangers of tenancies not verified by an independent, third party inventory report after adjudicators at The Deposit Protection Service (DPS) recently heard a case where although the landlord was claiming for cleaning and damage, the tenant won the case because the adjudicators could not establish that the landlord and tenant created their check-in reports at the same time.
The DPS stated that the burden of proof, as ever, is on the landlord to provide enough evidence to establish the tenant’s liability.
Zane, who is also the direct of My Property Inventories, said: “Moving in without an AIIC member independent inventory report means that neither party can unconditionally prove how the property was handed over or returned.
“An adjudicators award will inevitably veer away from the landlord every time. The importance of an unbiased report is second only to the signed tenancy agreement.”
Zane added: “Some agents have taken to compiling inventory reports for their landlord clients. This is both unprofessional and not acceptable evidence in order to offer the high level of protection all parties deserve. Alongside this it can mean the landlord losing any valid claim made by them for damage or neglect within the property.
“We are experiencing a large number of complaints by all parties about reports that are not by our members and we keep hearing they were via the landlord or agent themselves. Agents are not independent, and neither them nor landlords should spend their time compiling reports which cannot be relied on in all adjudication cases.
“We believe we are heading towards a large wave of liability court claims aimed at agents that gave their landlord clients inventory reports compiled by them that later on will not stand up in a dispute due to their biased nature.”