Metering of electricity with secondary prepaid electricity meters is an excellent way for property investors, landlords and letting agents to avoid the risk of having to pay electricity utility bills, when tenants don’t pay.
However, feedback from the field shows that prepaid electricity meters also have other benefits. Customers who have installed prepaid electricity meters, in their rental units, are telling us that one of the interesting benefits of using prepaid meters is that they are directly reducing their tenant turnover.
Sean Wheller, a Johannesburg Inner City property investor, has fitted Prepaid Meters from to all his rental units. Wheller had this to say about his experience with the meters, “When I installed prepaid meters it was with the view of reducing risk. The meters achieved this. Then, with time, I found that the number of disputes over electricity bills was completely eliminated. With fewer disputes, our tenants have been more satisfied with our services. Soon after, we noted that more of our tenants were renewing their leases. Normally, most tenants would not renew. I am convinced that the improvement relations has been brought about because of the prepaid electricity meters and, as a result, is one of the main reasons more tenants are renewing their leases.”
Building a good tenant base is a key factor for property investors and letting agents alike. They want to keep good tenants for as long as they can. The more good tenants an investor or letting agent has and the longer they remain as tenants, the more profitable their buy-to-let or letting operation is. Costs of advertising and vetting tenants are one of the main costs that chew into the profit made over the rental period. When a rental unit has a high tenant turnover, these costs must be frequently amortised over the period of each lease agreement. It stands to reason that if landlords and letting agents can reduce their tenant churn, that they will incur fewer marketing and vetting costs, and the overall profit from the rental lease will be increased.
Field research conducted by PrepaidMeters.co.za shows that tenants residing in rental units fitted with a prepaid electricity meter, are generally happier with the financial arrangement of electricity bill. The main benefit reported by tenants is that, because of the meter, they are able to monitor exactly how much electricity they are consuming. Tenants also point out that they like knowing how much they are spending as they are paying in advance and do not have to dread receiving a large electricity bill at the month end.
Tenants using Prepaid Meters have also commended the convenience of the meters. Mavis Mteto rents a flat in Joubert Park and had this to say about the meter her Landlord installed, “Since the meter, we know how much we use. When it’s finishing, we don’t go to go buy credit there at the shop. I’m paying to the owner with cellphone banking and then sending SMS to get the number anytime.”
The level of convenience is attributed to the fact that prepaid meters provide both metering and vending functionality in one unit. Where some prepaid meter systems provide only a metering solution, some combine both metering and vending functionality. The advantage of this is that vending of credit tokens is an integral feature of the meter. The downside of using meters that only provide a metering solution is that the tenant must use a card system and must visit a shop to obtain additional credit. This can be inconvenient for tenants. Cards get damaged, are lost, and tenants often forget to buy additional credit before their current credit is consumed.
The PrepaidMeters with vending solutions is simple, yet effective and very convenient for both the landlord and the tenant. Tenants pay money to their landlords Bank account for electricity using Internet or phone banking services. The landlord credits the sum paid to the tenants meter. The tenant then uses their cellphone to send an SMS requesting a 20-digit credit token. In this way, electricity credit can be easily purchased while at the office, or at home.
Tenants can request credit tokens up to the value of credit allocated to the prepaid meter by their landlord. Credit tokens can be requested at any time of the day or night using SMS technology. For example, if a tenant deposits R200.00 with a landlord for electricity, the tenant can obtain a 20-digit credit token for R200 or any lesser value. If a tenant requests a 20-digit credit token for R100.00, the tenant will still have R100.00 as credit remaining. This can be requested at any time just by sending another SMS request for a new credit token. So if the current credit token value is consumed at 7PM at night while watching a football match, all the tenant would do is request another credit token and immediately restore their electricity. No need to leave the house and miss the match. In under 2 minutes the electricity is restored.
This level of control, flexibility and convenience in attributed to the integral nature of the vending functionality supplied with all prepaid meters. It avoids any resentment on the behalf of the tenant for having to use an electricity metering solution that is prepaid. With these benefits and control, tenants are in control, but landlords are protected. Disputes over the lease period are reduced and lead to improved relations between tenants and their landlords. As field experience is showing, improved relations is having a positive impact for landlords and tenants that results more tenants renewing their lease agreements.