02 May Tenants and utilities who pays for what?
A subject fraught with contention in tenancies, is the paying of utilities, including water, refuse, sewerage and electricity. The most critical element in avoiding disputes and confusion is ensuring your written lease contains clear terms regarding who is responsible for the payment of utilities and at what stage these will become due. Once this has been established the party responsible will need to abide by the agreement.
More recently, further charges have started appearing on the billings of major cities, including charges like Home User Charges for Water and Electricity and this has people entirely up in arms. It is important to note that the wording in your lease is of the utmost importance in establishing who is liable. For example; if the lease states that the tenant will be liable for all service related charges then it would be fair and reasonable to expect payment of these extra charges, however if the lease is explicit about the tenant paying merely for their consumption then the landlord will need to pay for these. My personal opinion as a rental property manager is that the surcharges now being charged are related to the supply from the city and that by virtue of being a landlord the service itself is part and parcel of the landlord offering the property ‘reasonably fit for the purpose for which it is being rented’. My motto always is ‘fair and reasonable’ maybe meet your landlord or tenant in the middle as we are all under immense consumer pressure where service costs are concerned.
It is also a joint effort, I feel, that where it is necessary to install water saving devices that both landlord and tenant contribute to ensure a reduced consumption for the tenant while simultaneously improving the property’s overall water saving efficiency and value.
Electricity has become costly and it is vital that if your rental property is not fitted with a pre-paid electricity dispenser that you consider looking at investigating this as a landlord. The challenge we face as rental agency is when the Electricity account is one billed by the city of Cape Town but this account is currently not in the name of the registered owner of the property. Historically, the tenant would register an account with the local Municipality and be liable for this payment. However, it was found that often tenants would vacate and these accounts would be left unpaid and unsuspecting landlords left with the account. The disputes surrounding these has lead Municipalities not to allow the Electricity account to be in the name of any other party than the registered owner. If you, as Landlord, are not receiving the account and you are not aware about whether it is being paid then it is recommended that you contact your municipality for a copy. Simply don’t take your tenant’s word that it is being settled. It is highly advised that if your Electricity account is in anyone else’s name that you have this transferred to your name as the Municipality will deem you liable regardless. It is also imperative that you have accounts directed to you or to your agent to ensure timeous billing of your tenant. Many Municipalities offer a convenient e-billing option to receive invoices electronically. This makes it easier to forward these to your tenant.
It is now possible to have pre-paid water meters fitted and in an age of water restrictions and heavy penalties for overuse, that you investigate this option and to take measures to minimise the use of water by your tenant.
When handling the charging of Utilities to your tenant, there are some things to remember:
- You are obliged to provide your tenant with original accounts, billings and usage readings of utilities.
- It is advised that you invoice the tenant for their share of utility costs as agreed and do this immediately upon receipt of the account.
- VERY important, if the actual reading of a water or electricity meter cannot be made or substantiated it may not be fair to charge tenants estimates as this can result in disputes and many Rental Housing Tribal Offices will frown upon such a practice.
- Remember that if the accounts are in your name and you are liable for payment, the non-payment of such accounts and consequent disconnection of services will deem you in breach of your tenancy as Landlord.
- It is worth noting that it is unlawful to disconnect your tenant’s services in light of their non-payment, although cases exist where the courts have granted such a request as the Landlord was significantly prejudiced having to fund these services.
- It is prudent to provide a monthly statement to your tenant and to keep good written record of communications as it relates to the utilities.
- At the termination of a lease it is reasonable to deduct any outstanding utilities from deposits held.
It is not recommended that you rely on your tenant to attend to payments of utilities and services as these often become tardy in this instance.