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End of tenancy compensation is ‘holy grail’ of lettings
Calculating the right compensation
charges at the end of tenancies is
the holy grail of lettings and getting
it wrong can lead to unnecessary
disputes with tenants, according
to the Association of Independent
Inventory Associations (AIIC).
Many landlords and agents are
responsible for calculating the cost
for compensation charges against
a tenant and, in doing so, should
ensure it is reasonable and fair.
Everyone’s expectations are different. If
landlords and agents have to calculate
compensation charges themselves,
it is vital that they have a working
knowledge of accepted principles if
they are to avoid a dispute. Landlords
and agents should also explain to their
tenants how they have worked out the
compensation deductions.
Pat Barber, Chair of the AIIC, explains:
“If agents and landlords can prove how
they arrived at the proposed deductions
from their tenants’ deposits, all parties
involved will be happier to accept the
decisions. Fewer disputes cause less
headaches in terms of wasted time,
money and effort all round.
“There are a few bits of information
that agents and landlords need from
the start to aid their calculation, namely
the original cost of an item; age and
condition at time of check-in; length
of tenancy; average life expectancy
of the item and any extenuating
circumstances.
“Floor coverings are major bones of
contention for landlords, agents and
tenants, and recent research also shows
that accidental damage to flooring is
the main cause of insurance claims for
tenants (42%).
“So for example, if a tenant damages
vinyl or laminate flooring with drag
marks, deep scratches or scrapes, burn
marks and stains, these are considered
to be chargeable issues. A small
number of surface scratches, ‘nicks’
and minor indentations are considered
to be consistent with fair wear and tear
depending on the length of tenancy
and original condition.
“It is always recommended that care
instructions for surfaces such as vinyl
and laminate floors be provided to
the tenant by the landlord or agent.
Laminated flooring can vary in quality
from surface ‘photo’ coatings to a thicker
laminate top layer. Laminates with a
thin surface coating are prone to edge
lifting, although excessive washing can
also exacerbate the problem and could
be chargeable if this can be proved.
“Household circumstances, location,
environment, quality, pets, previous
wear and so on will all have an effect
on the final compensation amount.
Landlords and tenants need to put all
the evidence together to reach a safe
conclusion, one which can be justified
in writing at some point if required.
Landlords should be able to provide
written evidence of the original cost
and age of the laminate flooring, or
anything else in the property, to enable
proper compensation to be calculated.”
AIIC recently released a useful new
book for everyone in the lettings
industry, entitled ‘Understanding Fair
Wear and Tear’. The book costs £9.99
and is in a PDF format, available from
the AIIC website.
£21.9 billion of mortgage repayments
shows scale of PRS investment
The combined cost of buy-to-let
(BTL) mortgage repayments in
the last twelve months is £21.9bn,
according to the UK’s leading
landlord association.
Research from the National Landlords
Association
(NLA)
reveals
that
approximately one million landlords
in the UK have some form of BTL
borrowing, with the average cost of
their mortgage repayments in the last
year £20,950.
The staggering figure, which excludes
upfront deposits of typically 25 per cent
of property value, emerged shortly
after the Bank of England announced a
high of £8bn of BTL lending in quarter
three of 2014.
The NLA’s findings show that landlords
with smaller portfolios (1–4 properties)
spent an average of £10,335 on
repayments last year, compared to
£55,285 spent by those with larger
portfolios (11 or more properties).
On average it takes six weeks for a
landlord to secure a BTL mortgage,
with one in five (19 per cent) landlords
waiting over two months to complete
their BTL application.
Carolyn Uphill, Chairman, NLA, said:
“These figures really hammer home just
how much money private landlords put
into providing much-needed homes for
the UK’s estimated nine million renters,
especially if we consider that such a
large proportion are single-property or
smaller portfolio landlords.
“The majority of private individual
20 Landlord & Buy-to-Let Issue 55 • January 2015
investors are keeping a supply of wellmaintained homes on the market when
previous governments have failed to
incentivise or stimulate more housing
and social housing has been in longterm decline.
“There