How to Avoid Payment Problems with Tenants
As the economy continues to impact people’s wallets, more property owners are looking to sub-let a part of their space for extra income.
But doing your own kwH meter readings or splitting electricity bills between tenants can become a nightmare for landlords, body corporate and management agents – especially when disputes arise over their use of shared utilities. And regardless of whether your tenant ran their air conditioning or heater the whole week, you’re on the hook for the whole electricity bill to the council, until you can manage to make them pay up.
Here are some tips on your options to collect the electricity more easily via prepaid technology (and also dispute the bill from the council if it doesn’t look right). According to Citiq Prepaid, the biggest prepaid meter and utility vending system provider to landlords and municipalities, it might sound obvious, but you’d be surprised how many people still don’t know how it works and expose themselves to unnecessary risk.
Eliminate electricity bill shocks and disputes with prepaid metering
Finding fair ways to pay for shared utilities in multi-tenanted properties is a perennial headache for owners and tenants alike. ‘Lack of information leads to a lack of trust on all sides,’ says Citiq Prepaid managing director Michael Franze. ‘Disputes over electricity bills are a major problem in the property sector, and they cost everyone a lot of time, money and frustration.’
The root of the problem, says Franze, is that councils are normally only prepared to provide one electricity council meter per property, regardless of how many dwellings there are. ‘This leaves landowners, tenants and body corporates with a very limited set of options. They can agree to split the bill pro rata, which encourages overuse and inevitably leads to conflict; or they can install their own kwH meters and read them every month, which is administratively costly and also leads to disputes if tenants don’t trust the readings.’
The growth of electricity resellers over the past couple of decades only partially solved the problem, he adds. ‘At first resellers appeared to be the solution to the problem of inconsistent municipal billing and tenant non-payment, and the sector boomed. But eventually many of the new entrants went out of business, and
regulations were tightened up after a series of scandals. In the end, the property owner is still the one legally liable to pay the electricity bill – using a reseller just defers the problem.’
Franze says prepaid sub-meters provide transparency and reduce risk for everyone involved. ‘For tenants, prepaid makes their own electricity consumption more visible and ultimately more manageable. If you only get your bills a month or more in arrears, it’s easy to forget that day you accidentally left the heater on and wonder if the landowner is overcharging you. When you can track your consumption from day to day, or even from hour to hour, it’s much easier to budget.’
For landowners, body corporates and managing agents, he says, the benefits are equally tangible. ‘With Citiq Prepaid, we collect money from tenants and other end-users upfront and keep it in a trust account. The only charge is an 8.75% handling fee which is completely transparent to all users. At the end of the month, the money is transferred to the landowner and they pay the municipal bill directly. This enables the landlord to stay in control of the billing relationship with the municipality, but with no collection issues.’
Franze adds that Citiq Prepaid provides a range of reports to electricity users and landlords alike, which can be emailed or accessed through an online dashboard. ‘Complicated information is a source of disputes, so we’ve put a lot of effort into making sure our reports are easy for everyone to understand. Tenants can easily access their payment history and see exactly what they paid for, and landowners can see information for all their properties and quickly identify pilferage or discrepancies between the council bill and what tenants spent. If there are problems, our call centre is open seven days a week. It’s all about keeping the lights on.’