Affordable Housing in South Africa
Nature of the Case:
The case concerns a landlord’s profit-making by levying electrical service charges on tenants over and above the rent and the actual cost of electricity they consumed. The court characterized the Rental Housing Tribunal’s ruling in the initial complaint as administrative action and reviewed it to determine whether it was fair and just in the circumstances.
In this case, a landlord applied for the High Court to set aside a decision by the Gauteng Rental Housing Tribunal (“Tribunal”). Eighty rental tenants had brought a complaint to the Tribunal based on their landlord’s charge of about R385 per month per tenant for electricity in addition to the costs they paid for their individual consumption. The tenants discovered that the utility service provider, City Power, charged the landlord about R337,50 per month for the whole building. This meant that their landlord was generating a significant profit from the service charge. The Rental Housing Tribunal found that this levying of electrical service charges on tenants was an “unfair practice” under the Gauteng Unfair Practices Regulations and, consequently, interdicted the landlord from levying the charges. It also ordered the landlord to provide a copy of its City Power monthly electricity account to tenants on demand, and to repay all services charges levied. The landlord sought to have the Tribunal’s ruling reviewed by the High Court and an order of costs against the tenants.
The court upheld the Tribunal’s ruling, holding that the landlord had failed to show that the ruling was not fair and just and should be set aside. Finding that the “function” of the Tribunal was administrative and, therefore, governed by the Promotion of Administrative Justice Act (PAJA), the court found that the appropriate standard of review was provided by Section 33 of the Constitution (on just administrative action), namely, whether the action was lawful, reasonable, and procedurally fair. The High Court held that the Tribunal had reasonably and fairly found that the Unfair Practice Regulations applied to the landlord and that the landlord was not entitled to make a profit by charging a service fee for electricity received from a utility service provider.
The Landlord will have to repay all the tenants the amounts they were unlawfully charged from 2009 to 2013. The tenants are all still in undisturbed occupation.
The tenants are currently calculating how much is owed to each unit and will be approaching the landlord for a refund in due course as per the court order.
This decision sets precedent enabling tenants being overcharged by their landlords to seek recourse.