The 6th of April is behind us and the Tenant Deposit Scheme now open for business to landlords and tenants. What are the implications of the scheme however? There are no doubt many implications, but one term often mentioned and yet little discussed it seems, is that of the "evidence-based scheme". Letting Agents and Landlords now have to grapple with the TDS and all its ramifications.
Whatever flavour of the scheme landlords use, whether insurance based or custodial, to avoid disputes going to the courts, both schemes are supported by an Alternative Dispute Resolution (ADR) service - although the use of an ADR service is not compulsory under the legislation.
But if used, any dispute at the end of the tenancy can be referred to the ADR service provided both parties agree to be bound by the ADR decision. If either party does not agree to use the ADR service, the option of referring the dispute to the courts will remain. We are told that the ADR service will be impartial and evidence-based.
Even if either party opts for the court route instead of the ADR route to settle disputes, they still require evidence for what is claimed. In other words again, their claim must be evidence-based.
Tenant Deposit Solutions (TDS), one of the alternative dispute resolution services, will offer what they call aggrieved tenants an "independent, impartial and evidence-based resolution to any claim".
NLA chairman David Salusbury, who is also chairman of TDS goes on to say that "Our insurance based scheme will enable landlords to hold deposits, giving them a form of security against any damage that may occur during a tenancy". But what if a claim is made? "What evidence will landlords require to validate their claim" asks Jonathan Senior, head of training for Inventories Online Ltd, a nationwide and web-based, inventory clerk training and booking system. Evidence surely means "having some form of data verifying compliance with the scheme" he continues.
Such evidence is a "good inventory" according to Inventories Online. But there are inventories and there are inventories, they say. Some scant and limited in detail, some excessively detailed and difficult to read and understand. Some have been seen on Post-It notes and even once on a scrap of crumpled tissue paper.
In order that any ADR service is fair when deciding on deposit apportionment, the service will surely require that complaints are accompanied by sufficient and relevant evidence, evidence which is "accurate, detailed and verified" according to Senior, "a rarity" he says in his experience. "So few inventories are signed for by both parties, its no wonder we continue to witness grief at end of tenancy periods" he goes on to say. "I continue to see landlords lose money, all because they are unable to verify by way of a tenant's signature, that which they are claiming for".
Anecdotally we still hear of courts favouring tenants where deposits are in dispute. It is little wonder when courts have little or no evidence to work with that they award in a tenant's favour. Although it is possible that a landlord's claim was valid in its own right, it will fail if not backed up by evidence. In the absence of evidence, the courts have shown time after time that they will give the tenant the benefit of the doubt or simply throw out the case for lack of evidence.
To avoid unnecessary claims therefore, or even to help either landlord or tenant to succeed with a claim, providing the claim is justifiable that is, landlords and tenants must obtain a 'proper inventory'.
Be warned though, photos on their own are insufficient, they are difficult to verify. We know with today's technology one can manipulate such media to suit a need. Photos accompanying or even better still, embedded within a signed inventory make for good evidence. Video is almost certainly out of the question on its own. "Where can you sign a video" asks Jonathan Senior.
What both parties must sensibly have at time of tenancy start is a 'good inventory', with or without photos. One which is agreed to with any appropriate alterations included; and ensuring it is dated and signed by both landlord (agent) and tenant, no differently than with a tenancy agreement. Landlords or agents wouldn't dream of a tenancy without an agreement, so why not have a signed inventory at the same time. Without this, how can an ADR service or court, if it comes to it, find fairness?
A good inventory lists each room within a property, then lists each component of the room, that is a door or window, the ceiling and walls, lights and floor, even power sockets and switches. Then each item of content is added; furniture, kitchen items, bathroom fixtures etc. Each component and item is then given a condition comment. If a claim is made the ADR service or courts can see what was originally agreed upon and then what differences there are, thus allowing for fair apportionment.
We are left with a problem however, says Inventories Online; there are still only a few hundred properly trained inventory clerks in the UK. "We need several thousand trained clerks if only half the current landlords and tenants want sufficient support" Senior says. "Why is it that we have such a scheme without addressing a simple yet fundamental need" he continues.
How can landlords or tenants provide appropriately detailed inventories without the right information or training? Where can they find such help? There isn't much it seems. There is no universally recognised standard. Certainly there's nothing consistent, even within the industry. If one buys or downloads one of the many inventory templates or inventory packs from bookstores or the web, you will see they're inconsistent.
In time, especially when the ADR service and courts find themselves overwhelmed with cases difficult to decipher, we may see an initiative to bring the inventory clerk service to the forefront of the letting's industry consciousness. Until that day we suggest landlords and tenants ensure they have sight of, examine, comment upon and agree to a good inventory when signing their tenancy agreements.
In Macclesfield and the surrounding area there are very few companies offering such a service and only one which offers the kind of service described and recommended by Senior. That is Property Inventory Services [http://www.propertyinventoryservices.co.uk], based in Macclesfield. Proprietor, Brian Kilcoyne, says that "...the kind of service we offer has long been the norm in the south, where most landlords wouldn't dream of preparing an inventory themselves - they would get in a professional. We seem to have been lagging behind but with the TDS and the ADR service, that looks set to change."
That is not to say that local letting agents are not aware of the potential problems, the issue is one of convincing landlords of the need to invest in a good quality inventory. Helen Bunch, a member of A.R.L.A. and director of the Spencer Knight agency in Cheshire has over ten years experience in the lettings field and recommends Property Inventory Services to all her landlords. Mrs Bunch says "at Spencer Knight we have been advising all our landlords to use the services of a reputable independent inventory company since February 2005, with great success. Since 6th April it is important that landlords are able to show proof of damages caused during a tenancy. Enlisting a reputable independent inventory clerk is the best way of providing this proof. I expect that the use of such a service will become an industry standard and I am pleased that we are already able to recommend this service to our landlords."