Changes to the Wear and Tear Allowance

One of the trickiest aspects of letting a furnished property is deciding what levels of wear and tear are acceptable. Naturally, when furnishings and appliances are used every day they will start to get worn and will eventually need replacing. However, it can be tough to decide how much wear is allowed and when it will be deemed as excessive. Landlords need to take care with this, especially if you are going to bill tenants for damages.

The easiest way to decide if wear is excessive is to compare the state of the item at the beginning and end of the tenancy. By compiling a detailed inventory and taking high quality photographs before the tenant moves in, you can have a clear picture of the item’s original condition. You can then do a comparison between the images and the current condition of furnishings and appliances to see exactly how much wear and tear there has been.

It is important to remember that over time levels of wear are likely to accelerate because once items get damaged they will deteriorate at a faster pace. This needs to be factored in, especially if the items have been in the property for a number of years, or tenants may be penalised for damage that isn’t entirely their fault.

Landlords currently enjoy a 10% Wear and Tear Allowance which allows them to reduce tax on a portion of the rental income they receive on properties. The deduction is designed to help landlords pay for replacement furnishings if the cost is coming out of their own pocket rather than from tenants, but they can claim it even if they don’t buy replacements. The Allowance is being changed slightly in April 2016 so that landlords can only claim it when they actually replace contents.

In April 2016 the Wear and Tear Allowance will apply to rental properties regardless of the level of furnishings inside them. All landlords will be eligible, but claims can only be made on replacing existing furnishings rather than the original purchase. If the item being replaced is to be sold, the price should be deducted from the cost of the replacement. The new rules will bring clarity to the Allowance and open it up to more landlords. Consultations are currently taking place about the relief so there is still time for changes to be made to it before it comes into force.

As an experienced lettings agent for all Redbridge and London clients, we can advise you about every aspect of letting a property, including the impact the changes to the Wear and Tear Allowance will have on you or the opportunities they will present. We offer professional advice and always strive to do the best for our clients.