Eskom hikes positive and negative for landlords
Residential landlords who want to keep their tenants may have to forego any further rental increases this year as the new Eskom electricity tariffs start to eat into disposable incomes.
That’s the word from RentalsDOTCom, the rental property management division of Harcourts Africa, which notes that the average electricity is price in most areas has now risen from around 33c/kWh to 41,5c/kWh.
“But on the other hand,” says CEO Martin Schultheiss, “the tariff hikes are going to make it more difficult for many people to qualify for home loans because the banks take household expenditure into account when evaluating affordability. This means they will have to stay in rental accommodation, which is positive for landlords from the demand perspective.”
The national energy regulator (Nersa) gave Eskom the go-ahead in February to raise its tariffs by 25% from 1 April and in most municipalities this is now being passed on to electricity consumers, adding considerably to their household bills.
“However, to ease the burden, many householders are already looking seriously at alternative energy sources and we would like to suggest that landlords should consider doing the same for their rental properties in order to protect their investments.
“Where possible, they should look at installing solar geysers, gas stoves and other energy and cost-saving equipment to help tenants keep their electricity bills down.
“Although this will involve some capital outlay, we believe this will be easily recovered over the next couple of years because tenant demand for rental units with ‘green’ energy facilities is going to rise steeply.”
ISSUED BY HARCOURTS AFRICA