SA's electricity nightmare: You'll pay less for rent

These numbers will shock you. Eskom to push prices above cost of a home

Thousands of tenants in South Africa are going to lose the battle to meet the monthly cost of renting their homes unless they and their landlords
prepare properly for Eskom's rapid price hikes, says Andrew Schaefer, CEO of Trafalgar, the national property managers.

Eskom proposes increasing the cost of electricity by 45% a year for three years, after raising it 33% this year. Electricity that costs 60 cents/KwHr now is expected to cost R1.60 by 2012. Where the average monthly charge per flat is R800 it will be nearly R2 160. In many cases this will mean monthly electricity costing more than monthly rent.

In fact it is already happening. We know of one flat in Hillbrow where the tenants are paying R1 700/month and their electricity is costing R2 900. The flat is overcrowded, occupants have a score of cheap heaters, hair dryers, TV sets and other appliances that gorge themselves on power, and of course the hot water geyser is working all day. Most tenants have not developed an energy saving consciousness.

He says sectional title bodies corporate face the same growing crisis. Common property electricity makes up around 11% of the average levy now. That will increase to around 15% by 2012. The biggest problems in sectional title buildings is that the body corporate is responsible to the authorities for privately used electricity, so if individuals fail to pay, the rest will have no choice but to carry them. Pre-paid metres will become essential in all buildings.

Landlords must also beware of organized unrest, with themselves carrying the blame for the higher costs, they can't avoid taking some responsibility for their tenants' growing stress. An immediate way of help would perhaps be to reduce the normal 10% rent increase at the end of the lease, to say 5% if the tenant pays on time, doesn't overcrowd and looks after the property. They can also help educate their tenants in energy saving and make sure their electrical system is running as efficiently as possible.

Article from: www.realestateweb.co.za