Real Estate Investor Magazine South Africa December / Jan 2016 | Page 31

professional rental agents prefer to take control of this
aspect to protect the owner and the tenant.
Rental agents will provide statements to the owner
and the tenants, collect the amounts outstanding and
ensure that all utility accounts are settled correctly and
in time, to prevent a disruption of the supply. Investors
must clearly communicate the instruction to manage
these accounts to the rental manager and retain proof
in writing.
Rental guarantee
Certain rental insurance or rental guarantee products
offer an option to include utility payments. This means
the property owner is assured of receiving the full
utility payment on time, regardless of whether or not
the tenant has paid. The product provider will then take
proactive measures to collect the outstanding amount
from the tenant, but the owner’s cash flow will not be
impacted by the late or non-payment of the utility
account.

However, it is recommended that a separate
agreement is entered into between the property owner
and the tenant for the supply of water and electricity
to the premises. The agreement must be clear in
stipulating the payment arrangements and a pro-active
approach to immediately address arrear amounts is
essential.
Rental management
If a responsible rental agent is appointed to manage
the tenant and the property, utilities payments should
not be a risk. Usually there is no cost, or only a small
charge, for managing these accounts, since most
www.reimag.co.za

Prepaid meters
Prepaid meters for water and electricity are another
solution to consider. The latest state-of-the art
prepaid meters, which record all consumption, can
be recharged via the Internet or SMS. It completely
removes the responsibility from the owner and the
management agent, while tenants can monitor their
usage, eradicating the possibility of unexpectedly high
accounts. This ultimately eliminates the risk of disputes,
late payments and non-payments.
Whichever solution is selected, property owners
must not lose sight of the fact that they remain
ultimately responsible for the payment of the utilities
accounts for the property. It is all about managing the
risk, and where this management role is delegated to a
third party, it is important to clearly stipulate in writing
exactly how the delegated control will exercised to
minimise the risk.

RESOURCES
P3 Investment Group
DEC/JAN 2016 SA Real Estate Investor

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