Property market fears over by-law

By Max Matavire Municipal Reporter

ESTATE agents and rent collection organisations have described as “ridiculous” a Mandela metro municipal by-law which they say will discourage investors in the property market.

The by-law, promulgated last year, stipulates that only a registered property owner or his authorised agent can open a municipal services account.

This means property owners, and not their tenants, will be held responsible for electricity and water accounts.

The Institute of Estate Agents is to be asked to raise the issue with the municipality. The by-laws state the account holder must pay all amounts due in municipal accounts, and the onus is on the account holder to verify the accuracy of the account.

This has been challenged as it is seen as a negation of responsibilities by the municipality. Estate agents are saying the municipality has in the past, and is still failing, to collect its revenue and is now passing on the responsibility to property owners.

In the case of a block of flats, it means the property owner will pay the municipal bill and will then have to collect the money from tenants. Although not admitting that the law is flawed, the municipality admits that the argument of estate agents and other bodies has considerable merit.

Metro revenue and customer care manager Danny Christian, who is also the author of the by-law, said they were still “fine tuning” it. “We know there are complaints. We are looking at the by-law to find how practical or impractical it will be. We will try to work around it, but not to change the by-law.

“We will find an administrative solution,” said Mr Christian. Put to him that the by-law was disliked and needed changes, Mr Christian said he did not disagree or agree with that thinking. “There are merits on both sides of the argument,” he said, adding that people must be responsible enough to pay their bills.

He agreed the metro could not collect its revenue because tenants were absconding. He said, however, it was surprising that people were only raising this issue now when the by-law was already in force.

He acknowledged the concerns of estate agents. “It’s a business decision. We are now operating as a business,” he said.

Mike Shefer of Shefer Estates who are property managers and letting agents, said the regulation was not practical. “It’s a ridiculous by-law. I think they have not delved into this matter sufficiently.

“The property owner is not the consumer of the services so why should he pay for services consumed by somebody else? This will drive people away from investing in the property market,” said Mr Shefer.

He called on the municipality to create systems conducive for debt collection and not to shift responsibility. He felt the municipality’s internal management should be improved to make the collection of service debts more efficient.

Marion Engelbrecht of Independent Property Consultants said the by-law was not acceptable. “The owner cannot take responsibility for a tenant’s account.

“I do not know why they should not just cut supplies if one does not pay. The accounts should be in the name of the person consuming the services. The municipality is trying to make it easy for themselves,” said Mrs Engelbrecht.

John Price of John Price Estates said he was organising others in the industry to challenge the municipality. “We want to say to them this is ridiculous. It’s not fair. We are not supplying a service business and so why should we take responsibility?”

Mr Price said the by-law had been hushed up and passed through so that the municipality could hold property owners responsibly for accounts. “I have no doubt that this will adversely affect the property market,” he said.

The municipality said it was currently disconnecting services adding that some people made payment arrangements on which they reneged.

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