Property landlords should not let tenants have the responsibility for paying municipal accounts for water, electricity, refuse removal and sewerage because they could end up with huge outstanding bills when the lease comes to an end.
This is the view of Michael Bauer, general manager of Cape-based property management company IHFM who says that if the account is controlled by the managing agent or the landlord then they can pick-up any non-payments immediately.
“This allows the landlord or managing agent to monitor the account and make sure that it is paid each month so that there are no outstanding arrears when the lease is terminated,” he says.
He says that another way of resolving non-payment issues is for the owner to install prepaid meters on the property to ensure that consumers pay for the water and electricity they actually use.
“Prepaid meters are particularly advisable in today’s market as there will be an 80% increase in tariffs over the next three years and homes are already paying 100% more for electricity than they did several years ago,” says Bauer.
“With post-consumption billing (billing in arrears) the tenant invariably queries an account to delay payment and then the bills start mounting,” says Bauer.
South African municipalities have consumer debts that are in the region of R70-billion for unpaid services and rates and this figure is likely to climb because of the post-consumption billing system that is so widely used in South Africa.
In a separate development, Bauer warned that trustees in sectional title schemes should regularly review their insurance charges because a large percentage of the annual levy is linked to the cost of insurance.
He warns that trustees should be careful not to reduce the overall cover but should look at increasing the excess payable on the policy as this can reduce costs.
“If the excess payable is raised to say R2k, the other insurance costs can be cut by as much as 25%,” he says. Another way of saving insurance costs is to pay the premiums annually or quarterly in advance. This, says Bauer, can save up to 10% of the collection charges on the insurance policy.
He says that trustees should manage all insurance claims themselves and members should not be allowed to pass any claim directly to the insurer unless it is an emergency.
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"He (Bauer) says that trustees should manage all insurance claims themselves and members should not be allowed to pass any claim directly to the insurer unless it is an emergency."Add to this statement - and also, unless you have a very reputable and able managing agent, DO NOT allow the managing agent to manage your claims as the unscrupulous once get a fee for not processing claims. Experience (at a cost) made us wise. - Ewert
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