What Happens if the Checkout Inventory Shows Damages?

When a change of tenancy occurs in a property, there are a few essential tasks every landlord must complete.

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One of these is the property check-out so that the deposit can be returned to the tenants in full if no damages were found.

But what should landlords do at the end of the tenancy if the checkout property inventory shows that damage has occurred throughout the tenancy period? So that you’re prepared for either situation, it’s important to know who to contact and to ensure that both your check-in and check-out property inventory are watertight.

Before the end of the tenancy, landlords should remind tenants that they will need to organise a property inspection to conduct a check-out inventory, including a schedule of the condition report. The purpose of this visit is to compare the check-out inventory list against the one compiled at/prior to the check-in.

If the tenant wishes to dispute any of these proposed deductions, the landlord and tenant should seek to reach a resolution before escalating this further.

If there is no agreement between the two parties, the deposit protection scheme provider should be notified, and an independent adjudication process will occur.

The Adjudication Process

Once the dispute has been referred to the deposit scheme provider, they will seek to resolve it.

The deposit scheme provider acts independently and as a mediator between the landlord and the tenant. Both landlord and tenant will be expected to provide evidence to allow the deposit scheme provider to make an objective decision based on provided evidence. They will not call the landlord or tenant to receive a verbal description of the events.

Landlords will be expected to provide the following:

• Tenancy agreement
• Schedule of house inventory
• Check-in report signed by both the landlord and tenant
• Check-out report

Once all the evidence has been compiled and submitted, the deposit scheme provider will review this remotely. Note that they will not visit the property in person.

Photographs and periodic inspection reports collated throughout the tenancy submitted by either party will also be considered part of the evidence.

If remedial works were completed throughout the tenancy due to damage caused by tenants, receipts are expected to be submitted for any work conducted. Or quotes will be required for proposed work to remedy any damage after the tenancy ends.

All deductions must have evidence-based calculations and cannot be inflated by the landlord. Unless sufficient evidence can be supplied to convince the deposit scheme provider that the tenant should be liable for the damages, the tenant will receive their deposit back in full with no grounds for appeal by the landlord.

It’s worth noting that fair wear and tear must also be allowed and that this will be taken into account in the adjudication process by the deposit scheme provider.

In some cases, more evidence may be needed, or clarification may be required on certain pieces of information. This will inevitably increase the amount of time needed for a decision to be reached. This is why all evidence provided by either party must be clear and legible to avoid wasting any time.

It’s also important to note that although 30 days may seem a long-time, this is significantly quicker than having to go through the court process to claim damages from a tenant.

What advice are deposit protection scheme providers offering the landlords?

The following are only recommendations and are not legally binding requirements as part of a landlord’s duties of protecting a tenant’s deposit. However, these tips would certainly help landlords improve their chances of having disputes adjudicated in their favour.

The schedule of inventories should be completed to a professional standard, preferably using a comprehensive template. An even better option would be to hire a third-party and independent landlord inventory firm to conduct the inventory on behalf of the landlord.

Where possible, photographs should be included in both the check-in and check-out reports. This significantly aids in the adjudication process, as it provides hard evidence. Just remember to use a good quality camera to take any photographs, to leave nothing to chance.

It’s also recommended to conduct regular inspections of the property and document any issues you notice during the tenancy period.

Not taking the time to conduct a thorough inventory schedule at check-in can be detrimental to any dispute between landlord and tenants regarding deductions to their deposit.

At the point of dispute, the deposit protection scheme will want to see a detailed schedule of condition found out at check-in, signed by both the landlord and tenant.

Failing to conduct the inventory means a landlord would have no evidence to provide the deposit protection scheme with, and any basis of comparison is lost.

Remember, the tenancy deposit is the legal property of the tenant, and the responsibility lies with the landlord to prove any damage has taken place throughout the tenancy. The tenant is innocent unless proven otherwise.

A good inventory significantly speeds up the adjudication process, making the resolution much easier and more transparent for all parties.

Key takeaways

There are several steps a landlord should take before a tenancy begins to ensure any dispute at the end of the tenancy is watertight.

Failure to follow these steps will most likely result in landlords shouldering the burden of paying to fix any identified issues – even if they firmly believe the tenant has caused the damage.

Provided the paperwork is in order and completed to a professional standard, landlords will be in a strong position to make evidenced deductions from a tenant’s deposit.

A clear process exists within the industry which landlords should follow if they believe the check-out inventory shows damage to certain items.

This process is quick, and as previously highlighted, far more efficient than going through the court process for tenant damages.

If landlords are worried about not getting the initial steps right, we recommend seeking a professional firm to conduct the check-in report, schedule of inventory and check-out report. This is especially useful if you don’t use a letting agency or your chosen letting agency does not provide this service.

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