Apportioning liability to a defect or damage seen at checkout can either be a straightforward or a complicated process. This can also be very much dependent on both your experience and the information you have available to make a qualified judgement.
So how do you apportion liability?
Apportionment is the term usually associated with making good or repairing a defect, issue or damage that is (mostly) split between the landlord and the tenant. Often this is to do with cost i.e. how much does it cost either party to rectify the matter, take it back to the original situation / condition without encouraging or enabling betterment.
Inventory and checkout reports are vital to apportioning liability as they are the keys documents where (if compiled correctly) will provide the supporting evidence to apportion liability fairly.
To be able to do that, the report needs key information broken down into an easy to understand format and based on facts that showcase:
- Description of the items
- Conditions/Comments at checkin
- Conditions/Comments at checkout
- Assigned actions
- Evidence – pictures and video
To show the difference a check out report is needed; a before and after picture of the property, condition, issues and or damages. In its very basic form, the check out needs to be able to identify any material change derived directly from the inventory report. It should highlight any damage seen, cleaning issues, change in or missing appliances/furniture, meter readings, smoke and carbon monoxide alarms placement and whether they emit an audible tone.
For balance; the checkout should equally highlight where improvements can be seen in regards to a better or higher level of cleanliness, redecoration that has been done to a good standard (and whether it was approved!) or any other changes that are to the benefit of the landlord/property.
So if we have all the key components and understand what a report is we should be able to then apportion liability at the checkout stage; right?
Well it’s not that simple I’m afraid…
First roadblock is whether an inventory was compiled in the first place; if not then you have nothing to compare to at the end of the tenancy unless of course the landlord has other forms of evidence such as receipts, their own pictures but even then it could provide difficult (although not impossible) for the adjudicator to assess and make a considered ruling.
Another potential hurdle is that as inventory professionals we are seldom involved in any of the conversations, emails, requests and maintenance notifications and so are lacking a lot of background information to be able to make a fair and balanced judgement so our only option is to ‘say what we see’.
As shown in the following examples; evidence is key to understanding the issue/damage along with information that may then enable the adjudicator, agent or landlord to make an informed decision as to whether a tenants deposit will need to be either surrendered in full or in part.
Brown stain under radiator
Action: Landlord – Investigate: a valve is faulty and therefore causing a small leak and the brown stain shown but the work needs to be investigated to derive cost. This is a maintenance issue however, if this was left to continue to drip over a prolonged period of time the landlord could claim that the damage to the carpet could have been prevented or, at the very least, minimised by the tenant alerting the landlord via maintenance reporting or other means of communication.
Cracked / damaged hob
Action: Tenant – Liability: the damage to the hob is very evident and the tenant has been in situ for over 12 months. The previous inventory showed the hob was brand new at check in and was accompanied by all the relevant information, receipts and pictures within the report. So this is a cost to be levied against the deposit unless of course the tenant agrees to pay for an exact replacement (including fitting) prior to the end of the tenancy.
Cleanliness (or lack of) can be very subjective
Tenants expect (quite rightly) that a property should be clean at the start of the tenancy. The landlord equally has the expectation that it is then handed back over with the same level of cleanliness at the end of the tenancy. If it is in a poor or worse state then there is the potential for a full cleaning charge to be made against the tenant if they fail or are unable to rectify the issues.
However; that said; this doesn’t mean that betterment can be allowed (or be expected) to happen. If the property was not particularly clean at the start of a tenancy and is returned in a similar if not slightly worse condition and a professional clean is required, the difference could only be the deduction from the tenants’ deposit that would (or could) need to be apportioned. This means that the tenant is only liable for the portion of the cost that brings the property back up to the standard of cleanliness that it was at the point of check in.
The deposit, which belongs to the tenant, cannot be used to make improvements; this is considered betterment, and therefore unlawful.
The aim when considering apportioning liability and therefore the associated cost, is to find the appropriate level of response to dilapidations that achieves a positive outcome for both parties.
So when should you apportion liability to the issues/damages?
I always advise speaking with the client at the very outset of the working relationship to ensure that you both understand the parameters of the service required and this should always include whether they want dilapidations mentioned and or apportioned.
Some clients (larger corporate, housing associations or portfolio owners) have their own facility management services so just want the bare minimum of information. Others adopt a ‘belt and braces’ approach and for every issue wants an action to be assigned. Understanding the clients needs early on helps avoid future difficulties especially if the tenancy leads to a dispute and is crucial to a successful working relationship.
What report options are available for assigning liability?
By tapping on the triangle icon in the InventoryBase app; it opens up the actions feature which then prompts you to state what the action is then assign responsibility.
When apportioning liability this can be:
- Landlord – Maintenance
- Tenant – Cleaning
- Tenant – Damage
- Agent – Investigation
- Something else
You can state other types of issues or actions that can be communicated to the agent or landlord using Advanced Actions. With InventoryBase Enterprise users can change default Actions which provide a way to customise them.
With the new Advanced Actions feature you can:
- Create custom action reports which you can share/download as a PDF
- Add prices, notes, and mark actions as complete
- Choose to notify specific users or teams when an action type is completed
- See an overview of a property’s actions from the property info page by selecting the Actions tab
You can add an Action/Issue as usual by navigating to the room/area of the report you’re in and tap on the triangle icon or + Action button on the right of any line item.
You can find out more about this here.
Surely it’s not my job as a clerk to apportion liability?
This is very much down to you as the service provider as to whether you are involved in advising the client who may be at fault if an issue, damage or other area or concern is set an action.
As the industry operates without any real concrete framework or guidance that provides a structure that we can all work to, our role as providers is very much open to interpretation and how far we want to go. Some inventory clerks prefer to state the facts and issues and allow the client to make the ultimate judgement as mentioned earlier, they have access to all the information and conversation history and therefore are more likely to know whether the issue or damage highlighted is either pre-existing, part of a bigger problem or straight forward.
The key pointers here are to:
- Stick to the facts
- Ensure you provide the evidence to support your comments
- Keep actions to their basic form i.e Agent – Investigate if unsure
- Apportion liability where you are sure of the information
- Advise on costs taking into account all known factors and cost (receipts)
Obviously advising costs is a further step that may involve liability for your own service if, for example, your estimate is under or over the value associated with rectifying the identified issue that then does not cover the actual costs meaning the landlord is out of pocket.
How do I assign costs?
Many clerks feel uncomfortable with assigning costs because of the complexity involved and the fact that we would need to know everything about the issue to make a qualified assessment.
For example, replacement of a bedroom carpet. The clerk would need to know:
- the original cost of the carpet
- date of purchase to determine age
- quality of the carpet (determines life span)
- how long is has been ‘in use’
- how long this current tenancy was
- how many people (and children) were on the tenancy to determine ‘actual’ use
The information should be factored in when determining the cost of any damage and or cleaning that could then be apportioned against the deposit.
The following formula from Propertymark considers both the value and lifespan of the carpet and then splits the purchase cost over the lifespan. This formula can and is used for other items in the property and is (as I understand it) the tool used by the adjudicators and recommended by at least one of the deposit schemes.
|A||The replacement cost of similar carpet||£500|
|B||Age of carpet||2 years|
|D||The remaining lifespan of carpet (C – B)||8 years|
|E||Annual depreciation (A ÷ C)||£50 per year|
|F||The apportioned cost to the tenant (D x E)||£400|
The importance of integrations
If the pandemic has taught us anything it’s that collaborative working is no longer the option of the few but the choice of the many.
We can learn so much from our peers in all types of industries. This has taught us that keeping to ourselves, locked into one commitment or refusing to venture out of our comfort zone, will inevitably lead to lost opportunities.
Integration with other companies and services will only help improve the customer experience and convert leads into valued clients and long term customers. It is with this ‘collaborative approach’ that InventoryBase ventured into discussions and now integrates with The Depositary.
Equally innovative and forward thinking; the main aim of the integration is to help streamline the end of tenancy process and has the ability to remove up to 80% of the ‘end of tenancy’ admin if utilised correctly.
The process involves using Actions to apportion liability at the end of the tenancy (check out) with the option to add a breakdown of costs (if requested and or where known). Those actions are then automatically uploaded to the integration with The Depositary system with any disputes dealt with by the Tenancy Deposit Scheme (TDS).
Landlords are sometimes hesitant to commission a checkout, often seeing the process as either too expensive, pointless or unnecessary depending on they previous experiences of dealing either with the tenants or a deposit dispute service. However; in reality most reports cost less than 1% of the deposit held but have the ability to save the landlord much much more in terms of cost in replacing damaged or missing items, replacing carpet or cleaning of the property.
Many have lost disputes because of lack of evidence which can easily be rectified if an experienced and knowledgeable clerk or inventory service is commissioned. Equally; an impartial, detailed report protects the tenants deposit against unsubstantiated claims.
Everyone in the tenancy process (letting agent, landlord, tenant) benefits when the reporting service is quality driven, streamlined and efficient. Making the process as simple as possible and providing your clients with all the tools to reduce the risk of damages and disputes will stand you in good stead when it comes to securing new business and keeping your client base happy.
I recommend speaking to your clients as the integration becomes more widely used by agents and landlords, so that both you and they can realise those benefits and to highlight the integration as a USP (unique selling point) of your service.
Information and guidance on how to use the integration can be found here: https://support.inventorybase.com/en/articles/4663949-integrating-with-the-depositary