InventoryBase Academy Manifesto - Inventory Providers in 2020 - Practical Solutions for Practical Problems
In the past few weeks, several manifestos have been launched by the letting and estate industry.
These include the scrapping of the so called no fault eviction - section 21, the overhaul of section 8, the potential introduction of a new housing court.
The manifesto’s have also highlighted the need for the Government (this one or the next) to fully commit to the Regulation of Property Agents RoPA recommendations.
But one of the most significant changes to the industry has already been implemented; The Tenant Fee Ban.
In force since 1st June 2019 (Wales - 1st September 2019) an Independent research commissioned by Capital Economics on behalf of ARLA has predicted that, as a direct result of the ban, tenants will pay an increased rent of £103 per year which will inevitably increase the amount of deposits held.
Currently; DCLG figures show that over £4bn is currently held in the 3 main deposit schemes.
And these figures are set to increase as new households enter the rental market with an estimated 5.4m private renters and a further 4m renting in the social sector
However with such large sums of tenant deposits held, there is very little useful guidance about the type, structure and quality of evidence required by landlords and managing agents to help prove their right to withhold part or all of the deposit at the end of tenancy.
Even though the 3 deposit schemes all agree that independent third party reports are the preferred source of evidence (written reports with photographs and or video) there are no set guidelines when it comes to those that provide this information or what should be the standards to act as an inventory clerk.
The Main Issues
As it stands, anyone can set up as an inventory clerk and that effectively means they can access properties with management/keys with no required background checks on either the company or the individual supplier i.e Disclosure and Barring Service (DBS) check
The provision of inventories are often based on price rather than quality with the inevitable race to the bottom as agents look to recover costs after the tenant fee ban. This neither protects the tenant or the landlord as the report quality can and does vary wildly from provider to provider, region to region.
One reason for the inconsistency is that there are no real clear guidelines as to what reports should include, no required fields or information and more importantly why they are needed.
Pricing is equally inconsistent, and rarely reflects report quality meaning there is no incentive for the service provider to invest both in their personal development or service provision.
Letting Agents and Landlords
It is hardly surprising that the inventory industry fails to attract either investment or people looking for long term jobs as there is no ability to insist on contracts with either the landlord or letting agent when it comes to providing property reports, so job security is a very real issue as most providers are self employed.
Letting agents are very much in the driving seat when it comes to taking up the services of the clerk. They will use goodwill or (sometimes) the threat of bringing other service providers in as leverage when agreeing use of services or renegotiating terms with cost often being the overriding factor.
So with no ability to insist on or agree Service Level Agreements (SLA’s); quality, availability, responsibilities are all left open to interpretation which can leave the tenant without the evidential means to prove or disprove the condition of the property at both inventory and checkout.
As a direct consequence of the fee ban; tenants now have very little input or control over this particular aspect of the lettings process.
Equally; if the report fails to pick up on damage or include any evidence of the issues left by the tenant at the end of the tenancy the landlord stands to lose considerable income by being unable to let the property until the damage or issues are rectified. This means a loss in rent as well as the additional costs involved in bringing the property back up to a rentable standard.
Since 2008; adjudications have risen sharply from 458 to 31,865 in 2018 with cleaning appearing as a reason in 54% of cases with damage arising in 49% of disputes.
As a direct result of lost tenant fees; some agents have or are now considering taking inventory provision in-house to recoup lost revenue.
This could allow unconscious bias to creep in and with no requirement for any formal qualifications or current inclusion in the RoPA recommendations, agents can effectively pick and choose the information they provide to either the landlord, tenant or potentially to the adjudicator.
The issues do not lay just at the letting agents door though. The main inventory ‘self styled’ associations ARLA and AIIC are also effectively unregulated when it comes to inventory reports.
ARLA inventory members have no regional representation, support or meaningful guidance for providers. This is despite having a subscription based membership with a requirement to complete their own training in order to become a member and use the ARLA logo.
AIIC has a similar membership set up, however many argue that support is inadequate and that they are ineffective when it comes to lobbying for their members rights and better inclusion in the industry in order to be seen as a professional service with the rights and privileges this should bring.
As it stands; reports are not a mandatory requirement of the tenancy.
So it can be of no real surprise that there is a distinct lack of inclusion in the deposit dispute process for any inventory provider with no real and meaningful feedback opportunities accept for their published case studies.
This then begs the question; how are providers meant to gauge their response to any highlighted issues or understand how they might improve their services if they are not privy to and part of the adjudication process?
With the very real chance that the inventory / check out report will lose either the tenant or the landlord access to the deposit if they fail to evidence the property either at the start, during the tenancy itself or at the end when the tenant checks out you would think the deposit schemes would invest considerable time, effort and resources to the education and supporting framework of report writing and evidence gathering to ensure effective reporting.
Future / Next steps
So what should be the result of all these known issues, lack of standards, education and guidance?
For us it is absolutely clear;
‘ inventory reports, interim visits and check out reports must be made a mandatory requirement in all tenancy agreements and the wider lettings process ‘
But to be able to affect such a legislative change there needs to be a workable framework that can guide and instruct providers on robust report writing, evidence gathering and information dissemination that has, at its core, the clear goal for all reports to be factual, evidence based, impartial and beyond reproach.
How can this be achieved?
This will no doubt need either cross party agreement or a Government willing to take the necessary steps to introduce into law the mandatory requirement.
In order to regulate the industry there are two options;
include inventory provider services under RoPA or set out clear guidelines as to how providers operate
To enable either or both options the industry needs to:
- Agree, develop, implement and support inventory reporting standards
- Require providers to gain nationally recognised qualifications
- Agree national / regional minimum reporting rates
- Require providers to have Professional Indemnity, Public Liability and Employer Liability insurance
- Require deposits schemes to engage with and implement focus groups or panels that include inventory providers
- Require inventory providers to be a member of a property related regulator or redress scheme in order to operate
When InventoryBase Academy was developed; we set ourselves a very clear mission to:
- educate, inform, support and
- help guide the industry for the benefit of all inventory providers
We firmly believe that inventory, interim and check out reports are a vital component of the lettings process but should not be just about protecting the deposit; they should be as equally concerned with managing and protecting the rights and Health & Safety of all tenants throughout the life of the tenancy.
Let’s stop talking policies and get on with delivering practical solutions.