A few weeks ago we were all worried that Eskom would kick us in the pants again with a massive price increase for the year to come. An 88% increase had been rumoured much to the dismay of the already suffering South African public, fortunately it seems as though the company has reassessed its position.
The current increase Eskom is expected to apply for is 34%, they will present their case to the National Energy Regulator of South Africa and await their decision. An increase of 34% is not to be scoffed at though especially in these tough economic times where people stand the chance of losing their jobs everyday. Even what is viewed as a relatively small increase by comparison will still be an unwelcome knock on household budgets around the country.
The lower figure is probably due to Eskom taking into account the current economic climate and the fact that the country is expected to show minimal, if any, growth this year. Eskom is saying that an 88% increase would have enabled it to to expand and improve on service delivery while the smaller increase will merely allow it to cover operating costs.
With the property market only expected to begin a recovery at the end of the year once the rate cuts have begun to impact the country’s finances, it seems that other sectors are in the same boat. Hopefully Eskom can make do with a 34% increase and allow consumers to get away with a smaller bite out of their budget.
What do you think? Will Eskom apply for only a 34% increase?
Homeowners may be in for another shocking surprise when Eskom eventually reveals it’s price increase application to Nersa (National Energy Regulator of South Africa).
It has delayed it’s application and is saying that it is because of factors such as the magnitude of the world financial crisis and the approval by Cabinet of the Electricity Pricing Policy. According to Eskom these factors were not fully taken into account and the company now feels a review of their application is in order.
Last year homeowners felt the punch when some ended up paying almost double for their electricity after a monumental price increase by Eskom that was implemented to generate funds to improve on service delivery. After just being an accepted fact of life for decades that was generally ignored by the consumer Eskom has been in the headlines innumerable times in last three years. Unfortunately most of the attention was negative.
South Africa was spoiled by having a cheap electricity that was readily available from a company we could mostly ignore. While that is probably a selfish statement I bet most South Africans yearn for the days where we couldn’t remember the name of the company providing our electricity.
Hopefully the delay does not mean another huge price increase, many homeowners just can’t afford it.
Following up on yesterdays article “Landlords’ frequently asked questions.(part 1)” here are a few more popular questions landlords ask.
4. If I want to increase the rent may I do so at any time?
The short answer is NO.You have signed a contract that guarantees the amount of rent a tenant must pay for the full term of the lease. However you may include a clause in the contract that states that you can increase their rent if certain specific things take place, like if the rates go up.
5. May I increase the rent as much as I want to?
Again the answer is NO.You need to state in your lease agreement with the tenant how much you are going to increase the rent upon renewal of the lease.This needs to be a reasonable amount, usually only 10%.If you do not have this clause then you need to negotiate an increase that you and the tenant find acceptable.
6.My tenant says he has paid the rent, but i haven’t received anything yet.
It is of course the tenants responsibility to ensure that you are paid, therefore they must be able to provide some proof of payment. If they cannot you are entitled to give your tenant notice and have them legally evicted. Likewise if you know you have been paid you must be able to provide your tenant with a receipt.
Tell us how keeping records of any payments received/made has helped you in the past.
It will not come as a shock to anybody following the current activity in the property market to find out that a major bank recorded a 50% year on year increase in properties in possession and bond foreclosures in the month of August.
This is of course due to the financial strain most households are under due to the interest rate increases over the last two years.What is also frightening is that foreclosures and taking a property into possession are the absolute last resort lenders will take to recover their money.
With a basic figure of distressed sales increasing by 20% month on month the situation will most likely worsen in the coming months.
Statistics released by Auction Alliance have reported a 21.5% growth in the number of bonds 1 month in arrears between the first and second quarters of this year resulting in a figure of 70 000.There is also the figure for bonds that are more than 4 months in arrears for the same period that has risen from 18 000 to 25 000.
While the statistics sound pretty scary we are said to be better off than the rest of the world.This will probably be no comfort at all to those who have already lost their homes or those whose homes are in danger of being foreclosed upon.
But take heart,the picture is predicted to get far better in the second quarter of next year with the expected interest rate cut in April.