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Friday Jun 21, 2013

Selling power: Joburg landlord gets a shock on ruling

Johannesburg landlords have been warned that they are not allowed to profit from electricity sales and they are not allowed to pass on City Power's service charge of R385 to tenants.

Residents in Plettenberg flats in Hillbrow were being charged a service fee for electricity.

In a landmark ruling last week, the Gauteng Rental Housing Tribunal found that landlords charging tenants an electricity "service charge" violated the Gauteng Unfair Practices Regulations and the practice amounts to a profit that they were not entitled to make.

The Socio-Economic Rights Institute of South Africa (Seri) represented 80 tenants of a block of flats in Hillbrow called Plettenberg who were being charged R385 each for the electricity service fee. This meant the landlord, Young Min Shan, was raking in a profit of R27 000 a month.

Teboho Mosikili, Seri director of litigation, said the charge was not for electricity consumed at the property.

"It is rather for the 'service' the landlord claims he provides in delivering the electricity from the building's connection with City Power to each of the tenants' units. City Power charges the landlord this service charge and the landlord, in essence, was claiming he has the right to pass that charge on to each of the individual tenants," he said.

At the tribunal hearing, the tenants argued that there was no basis in law on which the landlord could levy such a charge, pointing out the Gauteng Unfair Practices Regulations, which states that "a landlord who is obliged by law... to provide water, electricity or gas services to a tenant, must - (d) charge the tenant the exact amount for services consumed... if such dwelling is separately metered; and (f) in a multi-tenanted building not recover collectively, from the tenants for services provided in excess of the amounts totally charged by the utility service provider."

The landlord argued that the electricity by-laws and Electricity Regulation Act allowed for the levying of such a charge and that the act did not apply because it was superseded by the tenants' lease agreements.

He further argued that he was the electricity service provider to the tenants, not City Power, and hence he was entitled to levy his own charge.

The tribunal, however, upheld the tenants' arguments, ruling that the landlord was interdicted from levying the charge in future and ordering the landlord to repay the service charges levied against the tenants since May 2009.

The tribunal found that the electricity by-laws and act precluded the landlord from making a profit from electricity. The landlord would need to have a licence to trade in electricity, which he does not have.

The tribunal unanimously rejected the arguments that the tenants' lease agreements superseded the Gauteng Unfair Practices Regulations, and that the "service charge" was valid because it covered maintenance of the water and electricity reticulation system.

In response, the tribunal said the "maintenance required must be funded from the rental collected and not under the guise of a separate 'service charge'."

The Star


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