Real estate business: Who pays electrical bills?

Posted by Felix Okoli on Saturday May 5, 2012 10:36:56:

If you are a landlord in Nigeria, I guess one of the problems you might have been facing with your tenants is the issue of electrical or Nepa bills. At times, tenants don't pay their Nepa bills or when they do, they do it late. Some tenants tend to always complain that they travelled or don't have enough cash to settle such bills now. So as a landlord who have invested in such real estate business, how do you go about it?

The bottom line is that it is the landlord's duty to pay the Nepa or electrical bills since such service was issued in his name. Tenants won't be taken to court for unpaid bills but it is the landlord. So as a houseowner, you should pay the bills or at least ensure that the bills are paid.

Here are certain ways you can deal with the issue of paying electrical bills:

Separate metering
Nepa bills tend to be attached to separate meters which are devices that tell Nepa officials how to bill an electrical line based on consumption. When you tend to group a lot of tenants using the same meter, they always tend to be a black sheep so it's best to give them separate meters if they live in different flats. However in much congested accommodations such as one room tenants, it may not be realistic so this strategy may not work for small room apartments. However, separate meters would allow Nepa officials to deal separately with tenants and meters who fail to pay at the due time.

Prepaid Meters
This is another cool way to avoid having your electrical line get cut by the power company due to non or late payment of bills by tenants. You know that re-connection fees now are quite high so preventing a cut in your lines is the better option. You can install prepaid meters for your tenants and all they would need to be doing is to just buy power cards which work like recharge cards on a pay as you use basis. This is a far more effective way to deal with electrical bill issues on the side of tenants and your lines would no longer be cut off nor will you have to bother about unnecessary estimate bills being issued by the PHCN or ordinary meters. The only problem with this method is that it is not readily available as there is still a lot of delay involved in getting a prepaid meter from the PHCN.

Include Electrical bill in the house rent
As a house owner or landlord, you can also charge your tenants electrical bills in advance if you include it as part of their yearly rent. It is that simple, all you need to do is estimate how much bill your tenants normally use per year and include it in their yearly rent as part of service charge, estimated power bill or something like that. This is good for homes with ordinary meters and when you already hav a history of how much tenants are normally billed monthly. If for example, the power bill for a tenant in 2010 was N5000 monthly and for a year that would be N60,000, you can just increase the house rent for 2011(i.e. the following year) by adding a power charge of N60,000 or maybe N75,000 to cater for inflation. If electrical bills have been included in the house rent you charge your tenants, it makes it easier for such bills to be settled on time and your tenant would not have to pay any monthly bills again. You should only make them understand why the house rent has been increased and that they no longer have to pay Nepa bills separately since you as the landlord would be doing that for them. This is by far the most effective way of settling electrical bills and make your tenants not have to pay any additional bills besides their one or two year house rent.