Municipal by-law used to hold landlords ransom

Madam – Municipal by-law used to hold landlords ransom.

Landlords in Newcastle may or may not be aware that the municipality is cracking down on unpaid municipal bills be it rates or services, which in principle I don’t have a problem with…but many landlords are not aware that the municipality is forcing landlords to pay debt owed to the municipality by the tenants who have rented the landlord’s property…tenants who have vacated without paying up.

I own a property which I rented out to a number of different tenants, a few years back, before I decided to renovate it.

Recently I decided to lease the property out again…imagine my shock and surprise when I was told that my new tenant was not allowed to connect water and lights because I owed thousands of Rands to the municipality from water and lights accounts not paid by the previous tenants!

My first question was obviously, how had the tenants managed to rack up such large municipal accounts (one owed close to R5 000! Bearing in mind that this was a few years ago when electricity was still cheap!) and had done so without being disconnected?

The answer, the tenant had entered into a payment arrangement with the municipality without my, as the landlord’s, consent or knowledge, then had disappeared without honouring this arrangement.

My second question, how can I be held responsible for this debt, as the municipal account is in the tenant’s name, opened with the tenant’s ID no?

The answer, because the municipal by-law (which has apparently been around for a number of years) states that any debt incurred on the property owed to the municipality is the property owner’s responsibility therefore the property owner carries the risk of renting out the property.

My third question was, why was I not contacted and informed of the payment arrangement? The answer, the municipality is under no obligation to inform the property owner of the arrangement, and property owners would not generally give consent to payment arrangements (damn right!).

My fourth question, has the tenant been traced, placed on credit bureau? Answer, no this has not occurred because the municipality does not have the system for this.

And my last question, can any new tenants in my property do the same thing? The answer, yes, if their situation is serious enough and I don’t have to be informed. So now I must pay a municipal debt I did not create and had no knowledge of, that was from a few years ago, before the municipality will allow my new tenant to connect water and lights.

I cannot sell my property because the municipality will not issue a rates clearance certificate if this debt is not paid. The worst of it all is that I had held deposits for these tenants which I refunded to them, unaware that they owed the municipality money… I could have used these deposits to repay the debt.

What I also picked up on is that while some of the more honest tenants did pay their municipal accounts up to disconnection, the municipality takes weeks to do a final reading which means there is always a final amount owing.

By then the tenant has left town and just does not pay the final account – but that’s OK… because don’t worry, the landlord will pay!!

Why can’t the municipality demise or pay for a financial system that can offer consumers a final account to pay? Instead of wasting money on an enormous, and to my mind, unnecessarily large municipal building that must cost close to R400-million, give the municipal staff the necessary tools to do their work properly and in the interests of ALL ratepayers!

I find this way of collecting money unfair and it feels to me that the municipality is going after landlords because it’s just easier than trying to track down the delinquent tenants.

I’m wondering if this method would stand up in a Constitutional Court of Law – I don’t think my rights as a property owner have been protected and I feel taken advantage of. I would love to know how many other landlords have been affected by this?

Land Owner

Response from Mayor, Afzul Rehman:

Thank you for the opportunity to respond. It is true that legislation allows the municipality to charge all outstanding utility bills to the owner of the property. We have however seen in the recent months an escalation in tenants absconding and leaving landlords with huge bills. In an effort to reduce this problem and safeguard the landlord we have come up with a variety of solutions.

Firstly we have increased the deposit required to open new accounts. Secondly we have consulted with all property agents and rent collecting agencies on ways to better protect the landlord. We have also increased the requirements of leases and owners signatures and identity documents to prevent fraud.

The huge problem we encountered was the decision taken in 2010 which allowed consumers to pay a certain flat rate if they disputed their bill. This decision has been rescinded and no one will be allowed space to accumulate huge amounts from month to month. We are also appealing to landlords to withhold rental and key deposits until the final municipal bill is concluded. We may be looking into only allowing landlords to have municipal accounts in their name.