Electricity bills. How non-payment effects Landlords/Body Corporates

In today’s hard economic climate the idea of people not being able to pay their electricity bills has become over the last 5 years so common that we all have friends, family and business associates who have either been unable to pay their bills, been Blacklisted, put onto Debt Review or been put into liquidation.

This is having a knock on effect on property owners due to non paying tenants. These non payments range from not paying their utilities to blatantly refusing to pay the rent and refusing to move out. To compound this it is no secret that the legal system, by far, favours tenant over Landlord, Estate Agent, Body Corporate and Trustee rights. Time and again, tenants come up trumps and landlords remain liable for their electricity bills and the cost of eviction – not to mention the lost revenue during this period.

bad_tenant_web Landlords

Landlords and investors all over the country continually run the risk that a tenant will run up high electricity bills and leave them with a hefty sum to pay at the end of the lease. After non-payment of rent, non-payment of electricity bills is the next major risk landlords face.

The problem is compounded with tenants who also do not pay their rent sum to pay at the end of the lease. After non-payment of rent, non-payment of electricity bills is the next major risk landlords face.

The legal costs attached to evicting a tenant are high enough, trying to also recover amounts for an unpaid utility bill just makes the matter worse.

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Estate Agents

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Estate agents who manage properties for their clients often find themselves in a frustrated position when the tenant stops paying either the rent or their electricity bills. The landlord then starts pushing on the Management agent to get the money in and the Tenant starts ducking and diving or getting plain nasty about some aspect of their character, professionalism or disagreement with something that makes him/her feel that they have the right to withhold monies from the landlord and the agent (in contravention of their Lease Agreement), leaving a frustrated, exasperated and irritated management agent.

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Body Corporates/TrusteesBody_Corporates_web

Many residential and commercial properties are owned in sections or areas by multiple owners, each owner owning one or more sections with the dwelling complex or building structure. In such arrangements there is usually a body corporate that is comprised of a number of owners. The role of the body corporate is to provide for governance of the scheme and taking care of various environmental and financial issues surrounding the operation.

In such environments it is common for the property to be supplied utilities on bulk-basis. Typically a single meter system is employed to calculate the overall consumption of all the sections and the common property area of the complex or building structure. Following this there may or may not be additional sub meters.

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Retail, Commercial & Industrial Property

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Retail and office parks may operate on a sectional basis where each section of the complex is owned by a different owner or they, more often than not, are owned by a single owner who then lets the various sections of the complex to commercial tenants. The situation regarding risk in such an environment is not far removed from that of the Property Investors circumstances and that of the problems faced with revenues collection management by a Body Corporate.

In both situations the owner of the property or the section remains liable to settle mortgage installments and utility bills or face penalties. Late or non-payment of rent or utilities can present significant risk to the property owner, increasing costs and reducing profitability.

Retail, Commercial & Industrial Properties Continued

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