Tribunal: Landlords cannot profit off electricity ‘service charges’
The Tribunal ruled that the landlord was interdicted from levying the irregular charge in future, and ordered the landlord to repay the tenants all the service charges levied against them since May 2009
Last week the Gauteng Rental Housing Tribunal handed down an important ruling for tenants, finding that the charging of an electricity "service charge" violates the Gauteng Unfair Practices Regulations and amounts to a profit which the landlord is not entitled to make.
SERI represents 80 tenants of Plettenberg flats in Hillbrow, Johannesburg, who are each charged a “service charge” by their landlord on their electricity accounts - approximately R385 per month. The charge is not for electricity actually consumed at the property. It is rather for the “service” the landlord claims it provides in delivering the electricity from its connection with City Power to each of the tenants' units. City Power does itself charge the landlord a service charge – of approximately R385 per month – and the landlord, in essence, claims the right to pass that charge on to each of the individual tenants. The net effect of this is that the landlord pays City Power approximately R385 per month in a service charge, but charges the tenants approximately R27 000 per month in its own “service charges”.
In a hearing of the Gauteng Rental Housing Tribunal on 8 May, the tenants argued that there is no basis in law on which the landlord can levy such a charge to them, relying on Regulation 13 of the Gauteng Unfair Practices Regulations. Regulation 13(1) states that “a landlord who is obliged by law or in terms of the express or implied terms of the lease to provide water, electricity or gas services to a tenant, must - (d) charge the tenant the exact amount for services consumed in the dwelling 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Electricity Regulation Act allow for the levying of such a charge and that Regulation 13 does not apply because it is superseded by the tenants’ lease agreements. The landlord further argued that it is the electricity service provider to the tenants, not City Power, and hence is entitled to levy its own service charge in addition to City Power.
On 14 June 2013, the Tribunal upheld the tenants’ arguments, ruling that the landlord is interdicted from levying the charge in future, and ordering the landlord to repay to the tenants all the service charges levied against them since May 2009.
The Tribunal found that the electricity by-laws and the Electricity Regulation Act preclude the landlord from making a profit off electricity. In terms of the latter, the landlord would need to have a licence to trade in electricity, which it does not have. The Tribunal also unanimously rejected the arguments that the tenants’ lease agreements supersede the Gauteng Unfair Practices Regulations, and that the "service charge" is valid because it covers maintenance of the water and electricity reticulation system in the building. In response to this argument, the Tribunal stated that "maintenance required must be funded from the rental collected and not under the guise of a separate 'service charge'."
The counsel for the tenants is Adv Stuart Wilson.
CONTACT DETAILS
Teboho Mosikili, SERI director of litigation: 072 248 2199 / [email][email protected]
Fikile Jele, Plettenberg flats tenants committee: 082 844 234