Must a landlord provide solar panels, or a water tank?
Category Rentals
While the City of Cape Town provides some load shedding relief to residents, the escalating challenges means that tenants often have to battle lengthy outings, especially when higher levels kick in.
Given the water challenges a few years ago and now the Eskom power outages, the question often arises as to what the obligations of a rental property owner or landlord are in terms of providing backup facilities for services such as water and electricity.
While it is a legal obligation to ensure the rental property is in a habitable condition and all installations are compliant, the landlord is not obliged to provide any backup facilities such as a water tank or alternative energy supply including solar panels, a solar geyser, generator or inverter.
What if the tenant wants to instal their own inverter or use their own generator?
While the tenant can use a freestanding inverter and battery back-up system, approval form the property owner/landlord is required for anything which is integrated into the existing electrical installation. It will in any event require an installation by a qualified electrician and a Certificate of Compliance.
It is encouraged that landlords should be flexible in terms of permitting tenants to make use of their own inverters or even instal their own solar panels, but it must be done in full compliance with the City of Cape Town's regulations.
The landlord must also ensure an Addendum is entered into with the tenant with regard to the installation and whether it will be removed, and the property restored at the end of the lease, or whether it might stay, and the landlord compensates the tenant.
Should landlords instal solar panels at their rental properties?
The City of Cape Town is actively encouraging all property owners to instal solar in the drive for renewables, but also energy independence. It is a huge benefit for properties and will add value. We are already seeing a rise in demand for properties with solar installations.
On top of that there is a tax benefit in the form of a once-off tax deduction during this tax year. For households it amounts to 25% of the costs with a maximum of R15,000. The service provider must be registered with the City of Cape Town (visit their website for more information).
There is also a future opportunity to feed excess electricity back into the city's grid and to be compensated for that, initially as credits and then as a cash refund. While any cash income will be taxable, the property owner can claim a deduction for related costs incurred.
It will most certainly add value to your rental property. There is also finance available with the banks offering various solar packages and plans to assist property owners to instal solar. All solar installations must also be registered with the City of Cape Town as noted above.
There may also be additional approvals required if the property is in a sectional title complex or estate, but property owners should already be aware of the regulations, or should take it up with the Body Corporate or Home Owner's Association to formulate an appropriate policy.
Can the landlord increase the rent to cover the costs of solar?
No, the landlord cannot unilaterally raise the rent to cover the cost of the solar installation. This can only be done with the permission and agreement of the tenant and an Addendum to the lease. Alternatively, the landlord would need to wait until the renewal of the lease and then it will be up to the tenant whether they would be willing to accept the higher rental. Given the benefit to the tenant and provided the cost is appropriate, it is likely to become a feature of all properties as time progresses.
It is always advisable to consult with a tax specialist or financial advisor before incurring costs of a capital nature because not all of it is tax deductible.
Home is our Story and property our passion. If you would like to chat about how installing solar can enhance the marketability of your rental property and how it may affect the rental income, or for any other property needs, please feel free to contact one of our Seeff Southern Suburbs rental agents at any time.
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Author: Gina Meintjes
