Northumbrian Water argues that the sector is vulnerable to debts
Alexandra Frean, TimeOnline – 4 June 2009
Residential landlords could be made liable for unpaid water bills left by departing tenants under a government review of water charges.
Landlords described the proposal, which has been submitted to the forthcoming Walker review on the social, economic and environmental aspects of water charging, as an “alarming prospect”. They said that it would push up rents.
The proposal comes amid plunging profits and rising bad debts at quoted water companies. Yesterday Northumbrian Water reported a 10.3 per cent fall in pre-tax profits to £152.7 million for the year to March 31. This was slightly ahead of analysts’ forecasts of £150.7 million.
The group, which provides water and sewage collection services in the North East, Essex and Suffolk, proposed a final dividend of 8.50p a share, compared with 8.07p last time.
John Cuthbert, its managing director, said that the company had increased its provision for bad debt from domestic users by £2 million to £30 million. Demand for water and sewage services fell by 1 per cent last year. He said that water companies were vulnerable to bad debts among consumers because they were not permitted to disconnect their supply for non-payment. This meant that their bills tended to be the last ones paid.
Recovering outstanding debt from tenants was particularly difficult. “Quite often by the time we have found out who the tenants are, they have gone,” Mr Cuthbert said. “We are talking to the Government about what help they can give us here. One proposal would be to make the landlord liable.”
Research for TDX Group, a provider of debt liquidation solutions for creditors, suggests that up to 5 per cent of all householders (representing 1.1 million homes) could default on their water bills this year, which would add a further £350 million of debt to water companies’ balance sheets by the end of 2009.
This is something landlords and the landlord associations should fight tooth and nail.
I can understand why this is a growing problem as tenants (as opposed to home owners) have become a far bigger proportion of the occupier population.
However, the answer is for utilities suppliers to improve their administration systems, and speed up the issuing of bills, not for a regulation obsessed government to make landlords responsible for yet another expense.
Anyone that’s had dealings with these utilities suppliers will know what a total nightmare it is – dealing with call centres trying to get the their systems to up-date records when they should.
Clearly the contract is between supplier and consumer – why should landlords get involved in this?
If this liability is put onto landlords they will have no option but to include a water charge in the rent, thereby increasing rents for all tenants.
What would clearly follow would be calls for the same to apply to electricity, gas and perhaps telcoms.
Clearly, all of this would add very considerably to the landlord’s workload.
Editor, LandlordZONE
Comment by site admin — 4/6/2009 #