SA Rental Property - Giving Landlords a Jolt

Landlords in South Africa could well be forgiven for believing that the law gives their tenants all the rights. Everything it seems is on the tenant’s side and while landlords do have some control, in most instances they are going to have to pay a fortune in legal costs to exercise those rights.

For instance, one of the major problems appears to be that although the tenant has definite rights as far as water and electricity are concerned, the landlord remains ultimately responsible for the payment of these accounts should the tenant move out without paying. There is no onus on the tenant to actually pay these accounts as municipalities hold the owner solely responsible even though the landlord has not personally incurred the debt. The landlord, of course, can institute legal action against the tenant in an effort to recuperate the losses; however,this is going to take time and money.

As things stand, the landlord may not disconnect any municipal services and this includes water and lights. The Rental Housing Act is specific about this. Regulation 12 of the unfair practice regulations to the Rental Housing Act provides that a landlord who is obligated by law or terms of the lease agreement to provide electricity to a tenant must provide that service and must not cause the supply thereof to be interrupted or cut off to the dwelling without a court order. In other words, a landlord may not disconnect the power supply to his own property in order to force a tenant to either pay the rental arrears or to vacate the property.

While all of this looks good on paper, the effect on landlords has been nothing short of disastrous. There are tenants out there who have taken full advantage of this law by moving in, running up huge utility bills before vacating the premises, and leaving the owner to foot the bill. The repercussions of this may not have been so bad if the various municipalities around the country kept good accounting records and disconnected the services when overdue. Unfortunately, there have been cases where tenants have racked up enormous bills without the services being cut off. The municipalities have their backs covered: the bill has to be paid before they will restore the services. They are not particularly interested in who pays what; they just want to be paid.

According to Mary-Ann Le Roux from the Durban branch of netVendor, the fact that tenants have been given carte blanche to manage their own utility accounts has backfired horribly in some instances. “In Pietermaritzburg the owner of a block of flats was been slapped with a Municipal Bill of R3.2 Million because the council did not cut off the tenants electricity supply due to non-payment”.

It is not only landlords who rent out property on a large scale that are at risk. Le Roux says anyone who rents out property should be on their guard. A recent case involved a tenant not only failed to pay rent for eight months, but thanks to an insider within the municipality managed to run up a whopping R30 000 electricity bill before absconding. The landlord of course was liable for the full amount.

Landlords have some advantage from keeping utility accounts in their own name rather than letting tenants take control of these accounts. At least they can monitor the account and take action before too much damage is done. It appears that some municipalities are also concerned about the situation. For example, the eThekwini Municipality in Durban will no longer allow tenants to operate accounts in their own names.

However, it is not the only way of ensuring that utility bills are kept under control. Prepaid electricity meters have become increasingly popular in South Africa. Once viewed as an effective way of getting electrical power to the masses, this miracle of modern technology has turned the tide on tenants, forcing them to pay for what they use. The news that a prepaid water meter has also become available is also going to make landlords lives a little easier.

“We have had an overwhelming response to the initiative since launching a pilot project in Ballito where we introduced the first Standard Transfer Specification (STS) approved prepaid water meter” says Le Roux. The first of its kind in South Africa, the news that prepaid water meters are now available will almost certainly be welcomed by those who have experienced the backlash of bad tenant behaviour. It is also sure to appease those who were concerned that it was just a matter of time before a similar scenario happened to them.

Article By Lea Jacobs

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