Real Estate Investor Magazine South Africa August 2015 | Page 40

MANAGING

Prepaid Water

& Electricity Meters
Precautions against account arrears
BY GAIL CAWOOD

I

n many rental properties there are no prepaid water
and electricity meters and the landlord will receive
the accounts for these each month for payment by
the tenant.
If the tenant falls into arrears with one or both of
these accounts, the landlord must act immediately and
not allow the sums to build up over any period of time,
nor must the landlord have to pay these bills on behalf
of the tenant.

“The landlord must monitor the
bills and payments carefully.”
The first thing that must be considered is the
possibility of installing prepaid meters, as these will
place responsibility for payment of the services in the
hands of the tenant rather than enabling them to use
as much as they will like without any guarantee that
they will pay in full every month. This also encourages
responsible use as the tenant will see what they
consume and can budget accordingly.
The cost of installing a prepaid meter is in the
region of R1 500 per meter (available through various
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AUGUST 2015 SA Real Estate Investor

installers) and the services are then bought through
a vendor by the tenant which immediately clears
the landlord of any responsibility of handling these
accounts.
If the installation of prepaid meters is not possible,
the landlord must monitor the bills and payments
carefully. As soon as there is any shortfall in payments
from the tenant, the landlord must send the tenant
notice giving them 20 days to remedy the breach. If
the tenant does not pay the outstanding amount in full
it is grounds to cancel the lease as there is a breach of
contract. Legal proceedings can now begin.
Lawyers will also need to give 20 days’ notice, so
the sooner the process starts of warning the tenant the
better.
If the landlord leaves the bills unpaid and the tenants
services are cut off this can be problematical for the
landlord as the services are in the tenant’s name and
the tenant is ultimately responsible for the payments.
The best thing to do in all situations when things start
to go wrong is to be proactive in sending warnings to
the tenant to the effect that they are in breach of their
contract.

RESOURCES
Knight Frank Residential
www.reimag.co.za