Wear and tear is a term that’s often referenced in lettings, but many landlords and tenants are unclear about exactly what falls under that umbrella. Essentially, it’s the gradual decline in the condition of a property’s fabric, fittings and contents, and the House of Lords defines ‘fair’ wear and tear as: “reasonable use of the premises by the tenant and the ordinary operation of natural forces”. The confusion over the term exists quite simply because what is ‘reasonable’ and ‘ordinary’ is subjective.
The key time where properly identifying ‘wear and tear’ really matters is at the end of a tenancy, when it needs to be established how much of the decline in the property’s condition is ‘normal’ wear and tear, for which you will have to bear the cost of replacement, and how much is damage caused by the tenants.
Here is some clarification on three of the main things that cause disputes:
|Item||Wear & tear||Damage|
|Carpets||Gradually becoming worn and dirty||A hole, rip or clear stain|
|Paintwork||Getting scuffs and marks over time||Dirty handprints, deliberate marks, drink or food stains|
|Appliances||Needing periodically repairing and eventually breaking down||breaking down as a result of misuse or abuse by the tenant|
The legal rule to understand is that if you’re making any deductions, you should not end up in a better position, either financially or materially, than you were at the start of the tenancy or would have been at the end, allowing for fair wear and tear.
Then, importantly, you need to determine what expenditure is tax deductible and what isn’t. From April this year – the 1st for corporation tax payers and the 6th for those paying income tax - the law changed and the ‘automatic’ 10% of rental income you could claim as an allowance for general wear and tear costs was replaced by a new system, which allows landlords to claim only the actual costs incurred in replacing furnishings during the tax year. Although this means the amount you’re able to deduct will now vary from year to year, over the longer term, it should average out to leave you in much the same position as you would have been with the 10% rule.
For more detailed information, see the government website, and if you need clarification or have any questions, your local Reeds Rains branch will be happy to help.
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