Judgment: Electricity Service Charges & Resellers mark-ups are Illegal

Stochos

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This case was first heard before the Rental Tribunal and was taken on review before the Johannesburg High Court. Both ruled in favour of the tenants and had the illegal 'service charge' which they paid monthly from May 2009 refunded.

At the High Court Judge Coppin also made a number of comments regarding electricity resellers. He reaffirmed that electricity supplied to a tenant must be at the same price as that obtained from a supplier (municipality or Eskom). This is as per the Rental Housing Act and its Regulations.
He also affirmed the Tribunal's opinion that the NERSA paper on Resellers was just an opinion and not law.

NERSA is expected to publish their resellers regulations this month.

............................................................................................
Jele and Others v Young Min Shan ('Jele')
electricity service charge - rental housing - Rental Housing Act - electricity by-laws

SERI represents 80 tenants of a building in Hillbrow, inner city Johannesburg, in a hearing before the Gauteng Rental Housing Tribunal. Their complaint concerns the legality of a “service charge” levied by the landlord against them on their electricity accounts. The landlord charges each of the tenants an electricity service charge of approximately R385 per month. The charge is not for electricity actually consumed at the property – that is metered and charged separately. 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 the charge on to each of the 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”.

The tenants argue that there is no basis in law on which the landlord can levy such a charge to them, and seek a ruling that orders the landlord to stop levying the charge, and to pay back the service charges that have already been paid. The case is likely to turn on whether the Rental Housing Act 50 of 1999 or the City of Johannesburg’s electricity by-laws are applicable, and the proper interpretation of those instruments.

The first hearing was held on 20 February 2013, where the matter was postponed to 8 May to allow for the filing of further papers and heads of argument.

On 14 June 2013, the Tribunal handed down its ruling, finding that the charging of a "service charge" to each tenant violates Regulation 13(1)(d) and (f) of the Gauteng Unfair Practices Regulations, and amounts to a profit which the landlord is not entitled to make (off electricity charges):
13(1) 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;
(e) ............
(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 and the landlord.​

In response to the landlord's argument that the "service charge" covers maintenance of the water and electricity reticulation system in the building, the Tribunal stated that "maintenance required must be funded from the rental collected and not under the guise of a separate 'service charge'." The Tribunal also found that the City's 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 landlord also raised the arguments that Regulation 13 does not apply because it is superseded by the tenants’ lease agreements, and 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. The Tribunal unanimously rejected these arguments. It ruled that the landlord is interdicted from levying the charge in future, and ordered the landlord to repay to the tenants all the service charges levied against them since May 2009.

The landlord subsequently launched review proceedings in the South Gauteng High Court under Rule 53 of the Uniform Rules of Court, seeking an order reviewing and setting aside the ruling of the Rental Housing Tribunal. The landlord suggests that it has three main grounds of review, relying on a multitude of complaints in relation to the judgment, the majority of which are aimed at the Tribunal’s ruling that Regulation 13 was applicable and the applicant’s conduct was a contravention of the regulation.

The review application was heard on 1 December 2014. The residents argued that the reasoning and ruling of the Rental Housing Tribunal is unassailable, particularly that the Unfair Practice Regulations are applicable and that the landlord’s conduct constitutes a contravention of Regulation 13. The residents further argued that there was no procedural irregularity in the proceedings before the Tribunal that would constitute a basis for setting aside the ruling.

On 20 February 2015 judgment was handed down in the High Court. Judge Coppin dismissed the application with costs, finding that the Tribunal’s ruling was reasonable, just and fair. He further found that the Gauteng Unfair Practices Regulations, which govern the relationship between residential landlords and tenants, prohibit a landlord from making a profit from allowing electricity to be supplied to its tenants.
 

Sinbad

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This law actually costs me money as a landlord with an on-premises cottage with sub-metering.
I buy my units at CoJ sliding scale.
My tenants buy units from me at the same sliding scale but for their consumption.

If I use 500 units myself, those are paid at the basic rate. My tenant uses 100kwh - those he pays me at HIS basic rate, but they go on top of my usage so I have to pay for them at the next tier. Sucks somewhat, but what can you do.

One question though - the submetering company charges me R20 a month for running the system. Am I entitled to recover that from the tenant?
 

Beachless

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This law actually costs me money as a landlord with an on-premises cottage with sub-metering.
I buy my units at CoJ sliding scale.
My tenants buy units from me at the same sliding scale but for their consumption.

If I use 500 units myself, those are paid at the basic rate. My tenant uses 100kwh - those he pays me at HIS basic rate, but they go on top of my usage so I have to pay for them at the next tier. Sucks somewhat, but what can you do.

One question though - the submetering company charges me R20 a month for running the system. Am I entitled to recover that from the tenant?
Just increase the rent to cover your additional costs? Why try and make the admin more difficult?
 
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Stochos

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One question though - the submetering company charges me R20 a month for running the system. Am I entitled to recover that from the tenant?
Not as an added electrical service fee, but perhaps it could be included in the rent. You do need to give your tenant two calendar months' notice of any increases.
 

cyberbob1979

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My previous landlord used to add 10% on-top of the meter reading cost... I know it was illegal but my usage was so low in the cottage that I didn't really mind (usually I was using about R350 odd a month or so final levy...
 

dunkyd

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Where and how do you report this ?
We pay a huge 'levy' but don't know how to solve the problem.
A housing estate.?
 

ambroseg1

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I am the owner of a townhouse in a complex. We purchase electricity at cost + 14% from a private company that the monkey's ass trustees have appointed. Suppose this doesn't apply to me? But if I were a tenant I would have a leg to stand on right?
 

Sinbad

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Just increase the rent to cover your additional costs? Why try and make the admin more difficult?
It's not me making the admin difficult - the management company deducts it from the money I capture on their vending page.
So if I say vend R100, they dispense it minus the management fee. So I have to remember that and vend R120
 

Stochos

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I am the owner of a townhouse in a complex. We purchase electricity at cost + 14% from a private company that the monkey's ass trustees have appointed. Suppose this doesn't apply to me? But if I were a tenant I would have a leg to stand on right?
Correct. A tenant could go to the Rental Tribunal and force the landlord to provide electricity at the same rate as that of the municipality or Eskom.

This private company does not generate electricity but is merely acting as administration agent. They are not registered with NERSA. They are merely pushing the costs of electricity up. The trustees would be better off getting each owner to install their own prepaid meters directly supplied by either the Municipality or Eskom (and not another fly-by-night lecherous reseller). Then the tenant would be getting the prepaid rates advertised on their respective websites.
 

Drunkard #1

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This case was first heard before the Rental Tribunal and was taken on review before the Johannesburg High Court. Both ruled in favour of the tenants and had the illegal 'service charge' which they paid monthly from May 2009 refunded.

At the High Court Judge Coppin also made a number of comments regarding electricity resellers. He reaffirmed that electricity supplied to a tenant must be at the same price as that obtained from a supplier (municipality or Eskom). This is as per the Rental Housing Act and its Regulations.
He also affirmed the Tribunal's opinion that the NERSA paper on Resellers was just an opinion and not law.

NERSA is expected to publish their resellers regulations this month.

............................................................................................
Jele and Others v Young Min Shan ('Jele')
electricity service charge - rental housing - Rental Housing Act - electricity by-laws

SERI represents 80 tenants of a building in Hillbrow, inner city Johannesburg, in a hearing before the Gauteng Rental Housing Tribunal. Their complaint concerns the legality of a “service charge” levied by the landlord against them on their electricity accounts. The landlord charges each of the tenants an electricity service charge of approximately R385 per month. The charge is not for electricity actually consumed at the property – that is metered and charged separately. 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 the charge on to each of the 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”.

The tenants argue that there is no basis in law on which the landlord can levy such a charge to them, and seek a ruling that orders the landlord to stop levying the charge, and to pay back the service charges that have already been paid. The case is likely to turn on whether the Rental Housing Act 50 of 1999 or the City of Johannesburg’s electricity by-laws are applicable, and the proper interpretation of those instruments.

The first hearing was held on 20 February 2013, where the matter was postponed to 8 May to allow for the filing of further papers and heads of argument.

On 14 June 2013, the Tribunal handed down its ruling, finding that the charging of a "service charge" to each tenant violates Regulation 13(1)(d) and (f) of the Gauteng Unfair Practices Regulations, and amounts to a profit which the landlord is not entitled to make (off electricity charges):
13(1) 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;
(e) ............
(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 and the landlord.​

In response to the landlord's argument that the "service charge" covers maintenance of the water and electricity reticulation system in the building, the Tribunal stated that "maintenance required must be funded from the rental collected and not under the guise of a separate 'service charge'." The Tribunal also found that the City's 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 landlord also raised the arguments that Regulation 13 does not apply because it is superseded by the tenants’ lease agreements, and 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. The Tribunal unanimously rejected these arguments. It ruled that the landlord is interdicted from levying the charge in future, and ordered the landlord to repay to the tenants all the service charges levied against them since May 2009.

The landlord subsequently launched review proceedings in the South Gauteng High Court under Rule 53 of the Uniform Rules of Court, seeking an order reviewing and setting aside the ruling of the Rental Housing Tribunal. The landlord suggests that it has three main grounds of review, relying on a multitude of complaints in relation to the judgment, the majority of which are aimed at the Tribunal’s ruling that Regulation 13 was applicable and the applicant’s conduct was a contravention of the regulation.

The review application was heard on 1 December 2014. The residents argued that the reasoning and ruling of the Rental Housing Tribunal is unassailable, particularly that the Unfair Practice Regulations are applicable and that the landlord’s conduct constitutes a contravention of Regulation 13. The residents further argued that there was no procedural irregularity in the proceedings before the Tribunal that would constitute a basis for setting aside the ruling.

On 20 February 2015 judgment was handed down in the High Court. Judge Coppin dismissed the application with costs, finding that the Tribunal’s ruling was reasonable, just and fair. He further found that the Gauteng Unfair Practices Regulations, which govern the relationship between residential landlords and tenants, prohibit a landlord from making a profit from allowing electricity to be supplied to its tenants.
This is bull****. Everything about electricity charges is regulated by NERSA, so landlords should have a section in those regulations dealing with their charges. Meters don't read themselves, cables don't fix themselves, yet municipalities are allowed to make a profit to cover this (and more), but landlords aren't? This should have been decided by NERSA, not the anti-landlord nazis at the rental housing tribunal. I hope this goes to the supreme court, and looking at the numbers involved, it will.

Correct. A tenant could go to the Rental Tribunal and force the landlord to provide electricity at the same rate as that of the municipality or Eskom.

This private company does not generate electricity but is merely acting as administration agent. They are not registered with NERSA. They are merely pushing the costs of electricity up. The trustees would be better off getting each owner to install their own prepaid meters directly supplied by either the Municipality or Eskom (and not another fly-by-night lecherous reseller). Then the tenant would be getting the prepaid rates advertised on their respective websites.
Except that there isn't a municipality in the country that will supply directly. Didn't you know that, or are you just stirring ****?
 

supersunbird

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This is bull****. Everything about electricity charges is regulated by NERSA, so landlords should have a section in those regulations dealing with their charges. Meters don't read themselves, cables don't fix themselves, yet municipalities are allowed to make a profit to cover this (and more), but landlords aren't? This should have been decided by NERSA, not the anti-landlord nazis at the rental housing tribunal. I hope this goes to the supreme court, and looking at the numbers involved, it will.



Except that there isn't a municipality in the country that will supply directly. Didn't you know that, or are you just stirring ****?
I am a landlord...

1. Are you an incompetent landlord that can't cover your costs though rent?

2. Where the **** is the big distribution network with high voltage lines and transformers that you have to cover, and have employees for, like the municipality does?

3. My unit in the complex has its own meter, read by the municipality, so who is supplying the unit with electricity, Santa Claus?
 

Drunkard #1

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I am a landlord...

1. Are you an incompetent landlord that can't cover your costs though rent?

2. Where the **** is the big distribution network with high voltage lines and transformers that you have to cover, and have employees for, like the municipality does?

3. My unit in the complex has its own meter, read by the municipality, so who is supplying the unit with electricity, Santa Claus?
1. This doesn't just affect landlords, it affects body corporates as well. Isn't it better to have electrical problems fixed from electrical revenue, rather than a catch-all levy for everything. Easy enough to charge a levy, but not entirely correct.

2. So the company that came out with a thumper to trace a fault on a line, they worked for free? And the line repair, also free?

3. You've got some unusual **** there. I haven't heard of a single municipality countrywide that will supply units in a sectional title or shareblock scheme directly.
 

Stochos

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This should have been decided by NERSA, not the anti-landlord nazis at the rental housing tribunal. I hope this goes to the supreme court, and looking at the numbers involved, it will.
Are you engaged in this illegal practice?

It was not only examined by the Supreme Court of Appeal but by the Constitutional Court, which confirmed the power of the Rental Tribunal.

You do realise that the Constitutional Court is the final arbiter.

In the Jele High Court Judgment, the Judge stated the following at 18:

It was also argued that any attempt by the landlord to rely on clause 7 of the lease agreements, which it had concluded with the tenants, and which allowed for the levying of service charges, was “unfounded” when viewed in the light of the decision of the majority of the Constitutional Court in Maphango v Aengus Lifestyle Properties , where it was, inter alia, clarified that the Tribunal had the power to set aside any provision in a lease agreement which it regarded as unfair.

In the Constitututional Court Judgment Maphango v Aengus Lifestyle Properties

52. It follows that where a tenant lodges a complaint about a termination based on a provision in a lease, the Tribunal has the power to rule that the landlord’s action constitutes an unfair practice, even though the termination may be permitted by the lease and the common law. Whether a termination in these circumstances could be characterised as “lawful” need not be decided now. “Unfair practice” is an act or omission in contravention of the Act, or a practice the MEC prescribes as “unreasonably prejudicing the rights or interests of a tenant or a landlord”. This formulation is significant. It poses “interests” in contradistinction to “rights”. This embraces more than legal rights. So used, “interests” includes all factors bearing upon the well-being of tenants and landlords. It encompasses the benefits, advantages and security accruing to them.104

53. This greatly enlarges the compass of unfairness under the Act. It means that unfair practices are not determined by taking into account only the common law legal rights of a tenant or landlord, but by considering also their statutory interests. This makes it even clearer that the statutory scheme does not stop at contractually agreed provisions, and conduct in reliance on them. It goes beyond them. It subjects lease contracts and the exercise of contractual rights to scrutiny for unfairness in the light of both parties’ rights and interests.

54. The Gauteng Unfair Practices Regulations provide that a landlord must not “engage in oppressive or unreasonable conduct”.105 This must be read in the light of the power to prescribe as unfair a practice that unreasonably prejudices a landlord’s or tenant’s rights or interests. It means that “oppressive” conduct might be held to entail an exercise of a landlord’s legal entitlements under a lease that oppresses or unreasonably prejudices a tenant’s interests.

55. I therefore respectfully consider that the Supreme Court of Appeal erred in concluding without more that the landlord’s termination of the leases could in the circumstances not be denounced as unreasonable or unfair, let alone oppressive. This approach in my view applied an unduly constricted approach to the question, which focused solely on the landlord’s common law entitlement to cancel the leases. Since in my view this dispute is best approached through the generous and powerful mechanisms the Act offers both sides to the dispute, I express no view on whether the landlord was entitled at common law to cancel the leases, nor on whether, if it was so entitled, the common law should be constitutionally developed to inhibit that power.



The whole point is to clarify what 'rent' is. Otherwise landlords will engage in bait and switch tactics. Advertise low rentals and then add other charges. If the Rental Tribunal didn't do this then comparing rentals would be impossible on a like-for-like basis. This would be unfair and also detrimental to the rental market.
 
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Drunkard #1

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Are you engaged in this illegal practice?

It was not only examined by the Supreme Court of Appeal but by the Constitutional Court, which confirmed the power of the Rental Tribunal.

You do realise that the Constitutional Court is the final arbiter.

In the Jele High Court Judgment, the Judge stated the following at 18:

It was also argued that any attempt by the landlord to rely on clause 7 of the lease agreements, which it had concluded with the tenants, and which allowed for the levying of service charges, was “unfounded” when viewed in the light of the decision of the majority of the Constitutional Court in Maphango v Aengus Lifestyle Properties , where it was, inter alia, clarified that the Tribunal had the power to set aside any provision in a lease agreement which it regarded as unfair.

In the Constitututional Court Judgment Maphango v Aengus Lifestyle Properties

52. It follows that where a tenant lodges a complaint about a termination based on a provision in a lease, the Tribunal has the power to rule that the landlord’s action constitutes an unfair practice, even though the termination may be permitted by the lease and the common law. Whether a termination in these circumstances could be characterised as “lawful” need not be decided now. “Unfair practice” is an act or omission in contravention of the Act, or a practice the MEC prescribes as “unreasonably prejudicing the rights or interests of a tenant or a landlord”. This formulation is significant. It poses “interests” in contradistinction to “rights”. This embraces more than legal rights. So used, “interests” includes all factors bearing upon the well-being of tenants and landlords. It encompasses the benefits, advantages and security accruing to them.104

53. This greatly enlarges the compass of unfairness under the Act. It means that unfair practices are not determined by taking into account only the common law legal rights of a tenant or landlord, but by considering also their statutory interests. This makes it even clearer that the statutory scheme does not stop at contractually agreed provisions, and conduct in reliance on them. It goes beyond them. It subjects lease contracts and the exercise of contractual rights to scrutiny for unfairness in the light of both parties’ rights and interests.

54. The Gauteng Unfair Practices Regulations provide that a landlord must not “engage in oppressive or unreasonable conduct”.105 This must be read in the light of the power to prescribe as unfair a practice that unreasonably prejudices a landlord’s or tenant’s rights or interests. It means that “oppressive” conduct might be held to entail an exercise of a landlord’s legal entitlements under a lease that oppresses or unreasonably prejudices a tenant’s interests.

55. I therefore respectfully consider that the Supreme Court of Appeal erred in concluding without more that the landlord’s termination of the leases could in the circumstances not be denounced as unreasonable or unfair, let alone oppressive. This approach in my view applied an unduly constricted approach to the question, which focused solely on the landlord’s common law entitlement to cancel the leases. Since in my view this dispute is best approached through the generous and powerful mechanisms the Act offers both sides to the dispute, I express no view on whether the landlord was entitled at common law to cancel the leases, nor on whether, if it was so entitled, the common law should be constitutionally developed to inhibit that power.



The whole point is to clarify what 'rent' is. Otherwise landlords will engage in bait and switch tactics. Advertise low rentals and then add other charges. If the Rental Tribunal didn't do this then comparing rentals would be impossible on a like-for-like basis. This would be unfair and also detrimental to the rental market.
On 20 February 2015 judgment was handed down in the High Court
Read before you post. Mark my words, this will be appealed.

City of Joburg's, City Power does. You might have to take them to court to enforce your rights.

See https://www.iolproperty.co.za/roller/news/entry/unfair_sectional_title_billing_lands
Do you have ANY idea what we're talking about?
 

Stochos

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Read before you post. Mark my words, this will be appealed.


Do you have ANY idea what we're talking about?


The time to lodge an appeal has since lapsed.

The grounds for appeal were very limited to non-existent.

The Constitutional Court in Maphango granted the Rental Tribunal powers to strike out clauses in rental agreements that it deems to be unfair even if the tenant signed the lease agreement.

If you read the judgment you will find that the Concourt reinterpreted what tenants' 'interests' are more broadly.

Bottom line is a landlord/electricity reseller cannot make profit from electricity.
 

noxibox

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1. This doesn't just affect landlords, it affects body corporates as well. Isn't it better to have electrical problems fixed from electrical revenue, rather than a catch-all levy for everything. Easy enough to charge a levy, but not entirely correct.
Then why not have a separate maintenance fee for everything?

3. You've got some unusual **** there. I haven't heard of a single municipality countrywide that will supply units in a sectional title or shareblock scheme directly.
The City of Cape Town does.

I am the owner of a townhouse in a complex. We purchase electricity at cost + 14% from a private company that the monkey's ass trustees have appointed. Suppose this doesn't apply to me? But if I were a tenant I would have a leg to stand on right?
There is some sort of general prohibition on putting a mark-up on electricity.

This law actually costs me money as a landlord with an on-premises cottage with sub-metering.
I buy my units at CoJ sliding scale.
My tenants buy units from me at the same sliding scale but for their consumption.

If I use 500 units myself, those are paid at the basic rate. My tenant uses 100kwh - those he pays me at HIS basic rate, but they go on top of my usage so I have to pay for them at the next tier. Sucks somewhat, but what can you do.
That is a tricky situation. The requirement is not to charge more than it costs, but it isn't clear whether they should get a full allocation of cheaper units or a percentage.
 

Drunkard #1

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The time to lodge an appeal has since lapsed.

The grounds for appeal were very limited to non-existent.

The Constitutional Court in Maphango granted the Rental Tribunal powers to strike out clauses in rental agreements that it deems to be unfair even if the tenant signed the lease agreement.

If you read the judgment you will find that the Concourt reinterpreted what tenants' 'interests' are more broadly.

Bottom line is a landlord/electricity reseller cannot make profit from electricity.
R20 000 x 80 months = R1.6 million. How do you know this hasn't been appealed? The only information on this case comes from the (commie leaning) SERI [-]propaganda[/-] media statement. And since ignoring half the post seems to be what we're doing here, I'm just going to ignore your insulting platitudes.

Then why not have a separate maintenance fee for everything?
In a sectional title or share block, the money to maintain this **** has to come from somewhere. It can all be stuck in a generic levy, if you want. Perfectly legal to stick that into a lease.

The City of Cape Town does.
I'll believe it when I see it.

There is some sort of general prohibition on putting a mark-up on electricity.
The landlord here didn't put a mark-up on electricity - he charged the tenants exactly what they would have paid had they been supplied by council. So there's one rule for landlords renting out an entire complex, and another for landlords that pay the body corporate...

That is a tricky situation. The requirement is not to charge more than it costs, but it isn't clear whether they should get a full allocation of cheaper units or a percentage.
So... great fun. 500 tenants using different amounts of energy, plus the service charge divided by the number of billable houses (he's paying it, he can charge it) and then you pro-rata the sliding scale, since you're now not allowed to make money on electricity, and then redo this calculation every month. You enjoy that, I'll take my chances charging according to the gazetted rates.

Edit: Oh, and don't forget that COJ's billing cycle and the landlords billing cycle will hardly ever correspond, and that COJ pro-ratas the sliding scale depending on the number of days between readings. Finding out what you're actually being billed for your billing cycle is a futile exercise, let alone figuring out what you can legally bill. Judge was clearly in ignorant libtard.
 
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Stochos

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How do you know this hasn't been appealed?
As per info from SERI.

Also SCA and Constitutional Court.

If you are charging additional levies in addition to rent then you are running a legal liability. A landlord is permitted to recover the amount from rent only. You cannot quote rent and then add additional hidden levies; this damages the functioning of the rental market.
 
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