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

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.

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What should South Africa do about its electricity crisis? Should landlords bear the brunt of price hikes? Share your views, below this article.

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responses to this article

Please explain Why do you suggest the landllord should take responsibility for the tenant's "growing stress"? Surely then the same argument goes when the tenant is under stress due to medical aid increases (or the government's NHI folly), extra taxes, school fee . .more increases, etc. The point being, the price of electricity has nothing to do with the landlord. He would have a simple business decision to decide whether to try to get a tenant who can in fact afford the rent? . .less by Realist on November 04 2009, 13:54 Find this comment inappropriate? Report it

I agree, electricity is not my concern. Sure, when it comes to common property it will affect me to some extent in my levies, but my tenants are more than semi-literate and they will swiftly figure out that if they pump up the electricity bill (they all have electricity meters) there is less . .more moola for luxuries like DSTV, beer, fast women, low profile tires, cell phone contracts, cheese on mid-month salticracks and what ever else tenants spend their spare cash on. If you want me as a landlord to come to the party, give directions and provide ice. . .less by CT Landlord on November 04 2009, 16:40 Find this comment inappropriate? Report it

yeah this is DEFLATIONARY..... The cost of electricity amongst a bunch of other price hikes will cause deflation.... yeah right ! Inflation is here get used to it, its only going to get worse with prices of everything skyrocketing by Brennan on November 04 2009, 17:38 Find this comment inappropriate? Report it

R800 a month currently? Where do you get that? I pay just over R100! So even if 8 people lived in my 2 bedroom apartment how would we possible be paying R800???? by anon on November 05 2009, 08:00 Find this comment inappropriate? Report it

Simple solution to paying more for electricity than rent Be like the ANC bigwigs: move into more expensive homes. by Mathematician on November 05 2009, 09:17 Find this comment inappropriate? Report it

R800 a month!?! If someone is using R800 a month for electricity, maybe it is time he makes some changes!!! I dislike the idea of paying for Eskom's mistakes as much as the next guy, but at the same time, people who waste electricity should pay extra. Maybe they should . .more look into buying a solar geyser... . .less by R on November 05 2009, 09:51 Find this comment inappropriate? Report it

inflation on landlords landlords will need to up their fees as the building levy will go up as they use electricity for various lights and parking areas. Just read that municipal rates are also going up so ,so we as landlords are going to cough up some small % at least...unless . .more the market alows a nice hike in apartment rental . .less by william on November 05 2009, 10:24 Find this comment inappropriate? Report it

Pre-paid meters Install a pre-paid meter and take the stress away. Tenants will quickly work out how to reduce elec consumption when they have to keep running to the nearest shop to buy electricity. by Anzhu on November 05 2009, 13:04 Find this comment inappropriate? Report it

Is Eskom going to rescue Brennan's inflation theory I read somewhere that the full electricity increase over 3 years will boost inflation by 0.8%. Well I reckon inflation will be minus 2% next year ... add 0.8% over the next 2 years and I agree we will have zero inflation in about 3 years time. So . .more sorry Brennan, you will need more than that. Untill the stats tell us otherwise, we are in deflation. . .less by CJ Says on November 05 2009, 14:26 Find this comment inappropriate? Report it

CJ and his lagging indicators The horse has bolted CJ and you are looking in the shed wondering whats going on... Please look at the leading indicators.... wake up CJ ! by Brennan on November 05 2009, 15:54 Find this comment inappropriate? Report it

@Brennan Debating with CJ says over whether there will be inflation or not next year is a waste of time, Brennan. To most people it's a mute point, there will be inflation, just of what magnitude. Deflation is temporary, few economies carry deflation for long. As . .more soon as the economy picks up it's back to usual. We will be fighting to keep it down. From what I read from our economists - but hey they are not CJ says, so what would they know - it's looking like being below 6% by years end, will stay just below 6% for most of 2010 before slowly ratcheting up towards the end of the year. A hint on where inflation will be headed next is in the Repo rate. Bar a simpathy cut next month the next move will be up. Seeing the Reserve Banks only mandate is to keep inflation in the 3 to 6 band, this signals we are at or very near the bottom of the inflation cycle. Of course they may just know a thing or two old CJ says doesn't about how these things work. I would take my lead from them rather. Happy debating further. . .less by Mass debator on November 05 2009, 17:49 Find this comment inappropriate? Report it

@CJ landlord What is the difference between a fast woman and a mid month salticrax? by Plutarch on November 05 2009, 22:32 Find this comment inappropriate? Report it

@Plutarch he he, ya no well fine :-) by CT Landlord on November 06 2009, 08:12 Find this comment inappropriate? Report it

R800 per month??? I wish! We are 5 adults (2 domestics and a nanny) and one small child and I pay over R3 000 per month for water and elctricity. We also try not to waste and lights are switched off when no one is in the room, all globes are LED or flourescent, etc. I'm . .more waiting for quotes on solar geysers, but that's probably going to cost me close on R100k. @Realist I also agree, I can't see why I should be worried about my tenants' electricity. If they can't afford it, they'll just move to cheaper accomodation. And Prepaid meters make a huge difference - most of my tenats has said their electricity is sooo much cheaper now, but I think they just think twice about using it. . .less by Bearded Bandit on November 06 2009, 12:57 Find this comment inappropriate? Report it

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