Anna Cox
    October 08 2004 at 02:23PM 
 
Tenants are the ones who will ultimately suffer after this week's Constitutional Court ruling in Johannesburg that landlords will be held responsible for their tenants' water and lights accounts.

This was the consensus on Thursday of the South African Property Owners' Association (Sapoa) and several estate agencies in response to Wednesday's ruling.

Sapoa chief executive Brian Kirchmann expressed extreme frustration over the ruling, saying his organisation had spent R500 000 in legal fees in the belief they would win the case.

That belief was based on the simple fact that there was a contractual agreement between the tenant and the local councils when they signed up for services - and that a third party therefore could not be held responsible for someone else's debt.

'More caution is simply going to have to be exercised'
"Ultimately the inefficiency of local government is being passed onto the landlords, who will have to employ extra staff to ensure bills are being paid, despite there being a contractual agreement between tenants and councils," Kirchmann said.

"And these costs will be passed on to the tenants."

"Where is it going to stop? It is a great pity because the industry is enjoying a good time at the moment."

The ruling would "definitely" affect investment in property, especially by overseas investors, who already believed there was too much complex legislation regarding property in South Africa.

"Now they will think twice because another hurdle has been added," Kirchmann said.

The ruling would "definitely" affect investment in property
Several estate agencies said that in the light of the ruling, they would now be demanding an advance deposit of three months on municipal service charges, over and above the rental deposit - which would cause hardship for many.

Most were outraged at the ruling, but said landlords would now have to run a much tighter ship and control their accounts every month.

The problem remained, however, that if the City of Johannesburg realised that their tenants' accounts were in arrears, they seldom disconnected homes.

Estate agent Wendy Machanik said she was disappointed at the ruling.

"But we have to be mature about it. Landlords are simply going to have to exercise more caution and screen tenants more carefully, and demand higher deposits to cover the water and electricity."

Another agent, Andrew Golding, said he did not expect the judgment to affect the property market.

"Landlords just have to be more cautious," he also said.

In the meantime, landlords are not taking the ruling lying down. They intend taking the City of Johannesburg head-on in the High Court, charging it with negligence for allowing the arrears to get so high and for failing to disconnect services when asked to do so by the owners.

Also, through the Transfer Rights Action Campaign, they intend asking the court to make a ruling on issues which were not covered by the Constitutional Court.

The Estate Agency Affairs Board would not comment on the judgment, saying they had not yet read it.

This article was originally published on page 3 of The Star on October 08, 2004