15 March 2021
With news coming out in February that the National Energy Regulator of South Africa (Nersa) had agreed to Eskom increasing its tariff by over 15% for the 2021/22 financial year, South Africans are once again looking at ways to cut their electricity bills. By comparison, the increase in 2020 was 3.9%, according to JKNV Energy’s records.
Will this have an impact on tenants and landlords who are already reeling under the adverse conditions of the current Covid-19 constricted economic climate? Will landlords seek to pass on such utility increases, can they install energy and even water-saving measures and expect tenants to use them wisely?
Paul Stevens, CEO of Just Property, notes that not all municipalities insist that utility bills be in the name of the property owner but that there is an increasing tendency towards this. “This is good news for tenants as restrictions imposed by municipalities due to the unpaid utilities of previous tenants are more easily managed if the landlord is responsible and not tenants who have moved on.”
Stevens notes that Just Property’s contracts make provision for determining who is responsible for the payment of utility bills, including electricity, water, sewerage, refuse and security. “It is not assumed that all utility costs are to be paid by the tenant and each cost can be negotiated. What is also clear in our contracts is that the onus is on the tenant to request any outstanding accounts; landlords are liable for the levy (if applicable) and the rates account.”
Is demand from tenants for eco-friendly and energy-saving applications increasing? Stevens says that features that reduce running costs and tenants’ reliance on municipal services are attractive to varying degrees. “Generally speaking, higher-end properties attract more discerning tenants who are more sensitive to environmental impact and drawn to eco-friendly offerings. However, for the vast majority of tenants, more fundamental factors like security and internet access trump eco-friendly features that may save a few rands and cents,” he explains.
Stevens also notes that energy-saving measures are more easily factored into new developments. “Retro-fitting solar panels etc. can be expensive and take many years to pay for themselves,” he says. “Right now, the rental market is shrinking and we expect landlords to be looking for ways to reduce their expenses in the short-term, rather than spending on long-term measures to lower bills.”
In 2018, the Western Cape went through a phase where water tanks and greywater systems became ubiquitous, certainly throughout Cape Town’s leafier suburbs as the water restrictions bit. Perhaps demand for such measures rises as awareness does. Stevens notes that long-term property investors are increasingly incorporating measures that are more resource-efficient in the drought-ravaged Eastern Cape. He references Just Property’s development partners 1Life Projects, and points to the Kragga Kamma Park Estate in Port Elizabeth where there are water tanks to harvest rainwater at each property, solar geysers are standard installations and some home-owners have installed Tesla batteries and solar panels to charge them.
Capital intensive measures are not the only ways to save though. Stevens notes that “water-wise gardens and artificial grass can reduce water consumption and still look gorgeous. They have the added advantage of being less maintenance for landlords and residents alike.”
It is one thing for owners to install and use solar panels, heat pumps to save electricity, or engineer grey-water systems to flush loos and washing machine rinse cycles to irrigate gardens to save water. Is it reasonable to expect tenants to manage such systems if a landlord installs them to keep utility bills down?
“If due care and time are taken to explain maintenance requirements, and a reference guide is left for tenants, out-of-the-ordinary fittings and fixtures should be manageable for tenants, especially when the will to save is present,” says Stevens. “However, It is often the case that tenants are not as diligent as home-owners may be when it comes to such management and maintenance.”
He says that Just Property recommends that landlords introduce systems that are low-maintenance and resilient, or to make special provision for repairs, maintenance and replacement through savings or insurance cover.
For more information on Just Property please visit www.just.property or call (087) 550 2258.
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