Real Estate Investor Magazine South Africa March/April 2020 | Page 47

MANAGING
Managing student
accommodation
Water & electricity costs
A
s the tertiary academic year kicks off, students
are struggling to find accommodation and savvy
property investors, developers and property owners
are moving quickly to either buy or renovate existing
properties to fulfill the need. However, while student
accommodation may be lucrative, racking up unpaid utility
bills can be a serious threat, especially for smaller operators. Pay-as-you-go
When securing contracts for accommodation with the
universities and colleges, many of the institutions will require
landlords to provide certain amenities as part of their contract.
This will include quantities of water, electricity and bandwidth.
According to Rorich, implementing a pay-as-you-go system is
the best way to remain profitable.
In 2017, the Commission of Inquiry into Higher Education
and Training found that there was a severe shortage of student
accommodation in South Africa, with space to cater for only
20% of students at the official academic residences. “Working with the owners of the student accommodation,
we are able to generate prepaid tokens which can be given
to the students each month and redeemed on our installed
prepaid sub-meters in each room as part of the residences’
monthly bundled accommodation offering,” He said.
A sizeable portion of the R35 billion in government tertiary
education funding earmarked for the 2020 academic year will
be assigned to subsidising students’ accommodation, and
investors have been rushing to supply the growing demand
over the last few years. Apartment blocks have been built and
some homeowners close to universities have even opted to
convert their houses into shared spaces and university digs.
Student accommodation can be trickier than most
While student accommodation is clearly a good business
prospect, managing this property class is not as easy as it
seems. Business Development Manager at Citiq Prepaid,
Raymond Rorich says when it comes to managing any rental,
having a monthly variable in the mix, like utilities, can make
payment collection a real headache.
“Even in the best circumstances, there is often a debate
around actual usage versus municipal meter readings. For
landlords this is not only tiresome, but can lead to disputes and
even non-payment. This is exacerbated when you consider
students living in communal environments,” Rorich explains.
While this solution has been derived in conjunction with
the residences, Rorich says the small business property owner
who has converted their house to a commune can just as easily
apply the same type of solutions.
“By installing a prepaid system and using smart software in
conjunction with the prepaid sub-metering system some of the
clients have set up tag solutions that allows them to measure
students’ communal water and electricity consumption. Once
they have used the allocated amount, the students can buy
top up tokens in the usual pay-as-you-go method. While this
sounds like a very regimented system, it massively cuts down
on disputes between landlord and tenants and even between
flat mates.”
Unfortunately, many of the utility management systems
on the market produce data that is almost impossible to use
in regular reporting. Rorich says Citiq Prepaid’s online system
gives landlords remote access to usage and transaction data
and reports in easy to understand formats. Reports are also
automatically emailed every month, easing the administration
burden.
“Prepaid sub-meters provide transparency and reduces
risk for everyone involved. For students, prepaid makes their
own electricity consumption more visible and ultimately more
manageable. Moreover, when you can track your consumption
from day to day it’s much easier to budget, and students can
avoid the panicked call to parents asking for additional money,”
Rorich concludes.
SOURCE Citiq prepaid
SA Real Estate Investor Magazine MARCH/APRIL 2020
45