Letting agents deal with inventories in a confused way, a trade body has said, with some doubling their profit by charging both tenant and landlord.
The Association of Independent Inventory Clerks said that practice varies from agent to agent in ‘shark infested waters’.
AIIC chair Pat Barber said: “There are three accepted parts of the inventory process. The new inventory compilation, the check-in and the check-out. Each part is vital to a safe let since the inventory is a legal document and important evidence in the event of a tenancy dispute.
“Letting agents deal with each of these operations in a variety of confusing ways. Inventory compilation is usually paid for by the landlord since it is in their best interest to have this compiled to protect their investment.
“This means that at the start of each let, a definitive description of the condition of their property and its contents is available. Check-in: usually the tenant pays for this. The check-in process is a firm demonstration to the tenant that ‘someone’ is on their side and actively working to ensure fairness and impartiality.
“This is the time when the tenant has the opportunity to ensure that they have input in protecting their security deposit, by agreeing the contents of the inventory. Not all agents offer a full check-in, but those that do will certainly find that their percentage of end of tenancy disputes will fall rapidly.
“The check-out can be paid for by either landlord or tenant and sometimes both.
“I am aware of agents who double their profit by charging both landlord and tenant for one or more parts of the inventory process.”
She added: “This confusing pricing structure seems to apply to most other fees and commissions that tenants and landlords are faced with – whether the letting agent is a member of a recognised industry organisation or not. No wonder then that at last rumblings are heard about restricting or regulating fees.
“Complete restriction is clearly not the way forward, as this will strangle the lettings sector and cause huge problems for the many good agents running a successful and morally profitable business.
“There must be a compromise here.
“Agents’ fees should be transparent from the start and clients must know exactly how much is payable and at what stage of the process. Tenants and landlords will not always ask the right questions. They will not be experienced in the sometimes shark-infested waters of the lettings business.”
“It is surely up to those trained to provide the answers and to to give out all the information required. This is simply good business practice.”
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
.png)
.jpg)
Comments
@Mack the Knife
Unfortunately outsourcing the task doesn't put things equally biased. The IC is contracted by the agent and will be eager to retain repeat business.
I recently moved into a new property. The inventory was provided by a third party IC. However it was clearly just a copy of the same inventory issued to the previous tenant with just the date changed. The number of descrepancies ran into 4 pages. It even included sizeable pieces of furniture which just weren't there!
However the main problem is transparency. The agent takes a margin and is keen to take the lowest cost service and get the highest margin. If there was complete transparency then the tenant would be allowed to propose and agree an IC with the landlord, such that nobody else took a cut!
@Hawkeye and @k - disagree with both of you about the letting agent's responsibility these days.
In the past, arbitration over deposit disputes saw too many judges viewing inventories produced in-house by letting agents as biased in favour of the landlord, their client - particularly if the landlord had paid the agent for it. This is the reason (mainly post April 2007) why agents farmed out the inventory/check-in/check-out business to 3rd parties so that the whole exercise would be deemed to be "at arm's length". The silly bat quoted extensively in the article needs to watch herself - don't bite the hand that feeds you etc
Dear @ qualified inventory provider.
Go back to school to learn how to spell. If you are unable to spell biased properly what hope is there for your inventories to be accurate?
Dear @k.
I agree and then when the original inventory clerk can’t spell (like our q i p above) then there is so much room for error and who then pays? The letting agent of course and quite right too as they should have done the job right in the first place as you said.
Glad you took my comment in jest!
I wonder if it will become a significant problem for Scottish landlords paying for inventories only for the tenant tenant withdraws at the last minute.
Actually you are all wrong. The compiling of the inventory always used to be performed by the Letting Agent. This was part of their job and the value they brought. What has happened is that they saw an opportunity to outsource this task to third party inventory clerks. Now letting agents don't do any real work - they just outsource it all to third parties and charge it to both landlord and tenant. This is all with a considerable margin added on top!
I read that twice and can not work out what all that actually says.
Doubling profits by charging twice? mathematically that is wrong. If the first charge earns 20% profit, having covered the costs, the double charge adds another 5 times the profit; all of the second inventory fee is profit. A headline of "Agents are Sextupling profits" would be a bit more catchy
This is just gufferage, talking of which. What happened to Bolton King's mid month press release.? have I missed the Global Head of Property's diatribe this month or is he slacking?
@SNP No offence taken but you missed out the Irn Bru and Buckfast cabinets. Landlord pays for everything to do with setting up tenancy.
Yes, but a Scottish inventory and schedule of condition only consists of a Deep Fat Fryer with Burnt on Grease so it's realtively cheap to produce :)
Seriously though, if you run an agency in Scotland what does your business do? Do you make the landlord pay for the inventory separately or absorb the inventory cost into your standard % fee? What happens if the tenant decides to pull out at the last minute?
@qualified An adjudicator makes a decision based on the quality of the data/facts submitted not who prepared or paid for the document. If he does otherwise he is not fit for purpose and should be reported accordingly
Pat please do not generalise Illegal to charge tenants in Scotland and when did an inventory become a legal document?
The cost of inventory SHOULD be split between landlord and tenant so that it can be deemed impartial. If only one party where to contribute to the cost, the inventory COULD be deemed to be byast towards that party.
'agents who double their profit by charging both landlord and tenant'
Splitting the cost between landlord and tenant is not doubling the profit - it is splitting the cost. We do this as the inventory is ultimately for the benefit of both parties.
I suspect in a few weeks they will issue another press release saying that where landlords are paying for inventories they are not deemed independent enough.
If I were a member of the AIIC I would be fairly miffed that they seem to be alienating their letting agent clients by issuing such bombastic press guff.
The inventory is a legal document?