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Benefits for landlords, tenants and municipality

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Prepaid meters may not yet be a “deal breaker” when searching for a new rental property, but more people are seeking the benefits they offer.

For residents, the pros include saving water and electricity by understanding their consumption and being able to monitor, control and budget for specific utilities, says Enbaya Prepaid Meters’s Karen Wheller.

For municipalities, consumers buy in advance and do not need to wait for the bill in order to pay it – if they pay at all.

“Each municipality in the country would have a different reason and main benefit for starting with such programmes. For some it is just to reduce the cost in billing not only to increase cash flow,” she says.

Landlords also see benefit in prepaid meters, says Mike Greeff, chief executive of Greeff Christie’s International Real Estate. They face ever-increasing risk as Eskom and local municipalities demand payment from them directly based on usage while tenants are the ones who need to pay for this.

“While the landlord is handling the ‘powers that be’, tenants have the potential to dispute amounts and delay the payment process, placing both landlord and tenant in a bad light. That is the reason prepaid meters are of the utmost importance these days.”

It is, therefore, highly recommend all landlords have prepaid meters installed, as it takes away the responsibility for usage recovery, says Mark Burt, rentals manager for Greeff Christie’s.

“This means it’s up to the tenant to buy and top up as they go. It also gives the tenant the freedom to spend just what they need, making it much easier for them to budget wisely,” says Burt.

Prepaid meters also assist when tenants vacate properties as there is no need to wait for the final utilities accounts, thus enabling more efficient finalisation of the damages deposits, he says.

In addition, prepaid meters give tenants peace of mind about how much electricity and water they are using and avoid lengthy, and often unresolved, fights with local municipalities.

As long as meter readings are correct, says Lorraine-Marie Dellbridge, rentals manager in the southern suburbs for Lew Geffen Sotheby’s International Realty, there is no pressing need for many people to install prepaid meters.

Sadly, though, this is where many issues begin.

“The electricity department is in the habit of billing according to estimates and then only doing actual readings every three or six months. Sometimes this results in a significant credit but there can also be huge deficits to be paid, especially in winter. And that’s when the fights can begin.”

While the prepaid route is the best for many, it does also have disadvantages, Dellbridge says.

“The council has for some time now been deducting a certain percentage from the electricity prepaid purchases for rates, if a landlord is not paying their rates. This then impacts the tenant and, in some cases, where there are hefty outstanding amounts, they grab most of the funds being bought toward the rates, leaving the tenant with very little electricity,” she says.

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