With the recent news that Eskom will raise electricity tariffs by 15.63% starting in April, commercial and retail tenants will be preparing to increase the pressure on already tight budgets.
According to Gregg Huntingford, CEO of Spire Property Solutions, rising electricity costs end up having an adverse effect on long-term tenants’ retentions, rents and property values. Bad news, considering the price Covid-19 has already charged tenants and homeowners. But with some good proactive measures, there is a silver lining.
“Renters SA under additional pressure”
“The increase in electricity costs has a significant impact on the total occupancy cost of tenants. However, this will mean that rents will be under additional pressure as a result of the indirect effect of rising debt levels, leading to increased vacancies, as tenants are no longer able, or no longer want to, pay higher monthly rents. by spaces. The long-term effect of this is that the property’s value decreases – something that homeowners need to protect themselves proactively! “
Huntingford offers the following advice to homeowners in order to counteract the negative effects of increases in electricity tariffs:
“Building owners and homeowners need to embrace the“ green ”change that is sweeping the world as a proactive and defensive strategy and must implement measures on their properties to reduce electricity consumption. Electricity costs aside, more and more SA tenants want to reduce their carbon footprints and work on green buildings, so properties that have implemented sustainable measures are generally more in demand than those that have not. “
“Going green doesn’t have to be a daunting and frightening task, and many homeowners imagine that this involves major changes and cost commitments that outweigh savings, but that is simply not true,” says Huntingford. “Start with small changes, like switching to energy-saving LED lighting and installing sensors so that the lights go out on parts of buildings that are unoccupied. In addition, measuring everything to understand the energy you use can greatly reduce electricity consumption. “
“Other measures that can be implemented by homeowners include the installation of solar geysers, hot water heaters and geyser timers so that the geyser is not turned on when tenants are not on the property after hours. Ensuring that air conditioning systems have good energy ratings and are serviced and maintained will also help to reduce electricity use. From the tenant’s point of view, a small change that costs nothing, but has a significant impact, is to change the behavior – so just turn off the lights if they are not in use! “
“It is small changes like these that will help reduce electricity bills at the end of the month and improve the tenant’s ability to pay rent,” advises Huntingford. “This has the effect of maintaining rents so that the value of a building is preserved or even increased as a result. Property experts like Spire will also help navigate the more complicated paths of larger facilities with a focus on energy savings, working with their well-established professional networks that will allow projects such as solar and wind energy production, as well as aspects such as energy storage. drums. “
“Greener, more energy-efficient buildings will end up attracting and retaining tenants for longer and with ideal rent. In addition, tenants and homeowners benefit from the general reduction in operating expenses for a greener building. “