"The Importance of a Property Inventory Report: Everything You Need to Know"

One of the most critical aspects of property rental is ensuring that the correct documentation is in place to prove the property's condition before a tenancy begins. So what is a property inventory report, and why is it so vital? Read on to find out…

Simply put, a property inventory report is a document that records the detailed inspection of a rental property. It itemises all the property's contents, listing the components and stating their condition at the time of inspection.

The property inventory report has a few primary purposes:

• To ensure that you have a comprehensive record of your rental property‘s contents

• To encourage your tenants to leave the property in the same condition they found it at the end of the tenancy, beyond reasonable wear and tear

• To help prevent disputes with tenants regarding any damage that may occur.
  

What to include in a property inventory report

The report should list all furnishings and describe the condition of bathroom(s), kitchen, windows, walls, doors, floors, garden, smoke and carbon monoxide alarms, and fixtures and fitting. It should also include visual evidence such as digital photography and/or video. This is known as a Schedule of Condition. This photographic evidence of the property’s condition at the start of the contract is especially relevant because of the requirements of the Fitness For Human Habitation Act (FFHH) – it’s the starting point in the audit trail that can prove fitness for human habitation.

FFHH legislation is based on the Human Health and Safety Rating System (HHSRS) – meaning that inventory processes now put more focus on photographic evidence relating to the potential hazards set out in the HHSRS.

How does the inventory report help prevent disputes?

When it comes to the end of a tenancy, your property inventory report can be compared to the check-out report so that you and your tenants can see how the property's condition has changed. That way, you can determine who is responsible for any changes and decide whether the cost of rectifying these should be taken from the tenant’s deposit.

Do I need a property inventory report if the property is unfurnished?

The quick answer to this question is: yes, absolutely! Even if there are no furnishings, you still need to carefully record the condition of each room so that you can protect yourself if you have to address any structural damage caused by tenants.

Who should carry out the property inventory?

Some landlords choose to create the property inventory themselves – the other options are to use a lettings agent or an independent inventory clerk. The advantage of using a third party is that they will be deemed to be impartial should a dispute arise further down the line. For example, the Tenancy Deposit Scheme (TDC) prefers inventories compiled by professionals over those done by the landlord.

When should I create the property inventory report?

Ideally, the property inventory report should be created on move-in day, and the tenant has the right to be present while the inspection is being done. The tenant must sign off on the property inventory report, so they need to check it carefully to ensure that they agree it is accurate. The landlord must also sign the document, which becomes a legally binding element of the rental agreement.

Find out about the other legal landlord documentation you need to consider in our blog post 10 legal documents landlords need to get right.