Landlords: What You Can and Cannot Do When Charging Tenants for Utilities
The landlord or owner of a rented property is responsible for the payment of municipal services. But there are some questions that require clarification.
It is rare for a municipality to allow a tenant to open a utility account on the rented property. This invoice is for the property owner, which means that even though the tenant consumes the services (e.g., electricity, water, and sewerage), the tenant must pay this in addition to the rent unless otherwise specified in the lease agreement. An alternative is a prepaid utility, which is controlled by the tenant.
Meyer de Waal, Director of legal firm MDW Cape Town Inc, provides insights into the landlord’s obligations and responsibilities.
Landlord Responsibilities for Utilities
Proof of Utilities Consumption
If the lease requires tenants to pay for utilities, landlords must provide tenants with a statement and proof of consumption. Monthly billing is preferred to avoid disputes or high, unexpected bills at the end of the rental term.
Should Utilities Be Included in Rent?
In cases where monthly utility bills are delayed or inconsistent, landlords and tenants can agree on an estimated consumption. This amount can be based on the tenant’s average usage and reconciled quarterly.
Work-From-Home Excess Usage
If a tenant works from home and exceeds typical consumption, it is best to include this scenario in the lease agreement. If a tenant does not disclose work-from-home arrangements and the lease specifies residential use only, the landlord can recover the excess usage costs.
Handling Default on Utility Payments
To avoid financial risk, landlords should include an electrical deposit as part of the rental deposit, as landlords remain liable for unpaid utility bills under municipal rules.
Charging Interest on Unpaid Utilities
Landlords cannot charge interest on unpaid utilities as this may constitute unjustified enrichment. However, landlords can charge an administration fee to collect arrears.
Resolving Utility Charge Disputes
It is recommended to include an arbitration or mediation clause in the lease agreement. Tenants must still pay rent while disputes are ongoing. Should a resolution fail, the matter can be referred to the .
Handling Ongoing Disputes
Landlords can insist on payment while a dispute is ongoing, similar to city council processes. It is advisable to include this condition in the lease agreement.
Exiting a Lease Due to Excessive Utility Charges
A lease agreement can only be terminated if the landlord breaches its terms and fails to remedy the issue. Tenants should first request proof of utility expenses before escalating disputes.
For more legal guidance, refer to Section 12 of the Rental Housing Act, which outlines unfair practices regarding municipal services.
Conclusion
Clear lease agreements and open communication can prevent misunderstandings regarding utility payments. Both landlords and tenants should understand their obligations to ensure a smooth rental experience.
