Dealing with Tenants Not Paying: Can Landlords Cut Off Electricity?
Let’s take a look at the matter in hand; a tenant doesn’t pay a bill and you’re shouldering the responsibility to pay it out to the supply company. Undoubtedly, that’s an unfair situation a tenant is putting you through, not to mention that it is your property. You are supposedly allowed to go ahead and cut off the utility supply as you wish. But what if we tell you the answer is no? Yes, it’s unlawful for you to disrupt the electricity and water supplies and doing so can land you into a legal battle between you and the tenant under Section 7(2) of the Specific Relief Act 1951, which states that landlords are prohibited from taking their own action to repossess their property.
Besides, even if you do cut off the supply, did you know that there are tenants out there who can outsmart this tactic? Yes, if these tenants are inconsiderate enough to not keep their end of the bargain, then they will also take ‘no’ for an answer. Generally, electricity meters are situated further within the home, making it difficult for the utility company to cut off the supply when the front gate is locked or if the tenant gives them a hard time doing their job. As for the water supply, it can be restored by joining the two ends of the pipe or rubber hose where the water meter was placed.
Therefore, as a landlord, it is important to understand all the things that can be done - not only after getting a tenant but also before that. In this article, we would like to share some mild measures you can take before deciding to go for the drastic one, such as cutting off the power supply - which is illegal - and addressing this issue fair and square.
Have a solid Tenancy Agreement
Let’s start off with how you can avoid all these in the first place. The most important thing is to ensure that your interests are protected in the event of late or missed payments; by having a clear tenancy agreement. A tenancy agreement is a legally binding contract between the tenant and the landlord. Before signing it, make sure that your rights are properly outlined and that the tenant agrees to your right to enter the unit provided they have been proven to violate the agreement.
Keep it civil
You can include the number of unpaid bills you can tolerate in the tenancy agreement. Usually, even a one-time default in bill payment counts as a breach of contract. But there is another way of setting about this issue without involving the court or a lawyer. Especially if the tenants had regularly done their part, don’t jump into the idea of evicting them for paying 3-5 days late.
There could be a number of reasons for that, for example, the tenant is away and has forgotten about the payment, or maybe they are temporarily stuck in a personal crisis (we have had tenants hospitalised by covid and couldn't pay bills!). The best way to handle this is to give them a friendly reminder via a phone call or Whatsapp. At Instahome, we always help our landlords with rental reminders and collection so they won’t have to tire themselves chasing for late payments.
Although there’s no denying that a tenant-landlord relationship is businesslike, it wouldn't hurt to keep it civil as it can benefit both sides in the long run.
Incentivize them with discounts
This may sound a bit of a stretch, but it would actually help if you can catch on to tenant psychology. If you are on good terms with the tenant and want to keep them instead of finding a replacement, you can set up a new payment scheme. This approach is a way to encourage tenants to fulfill their responsibility.
Adrian Un, the CEO and co-founder of property education and investment company Skybridge International shared his experience when dealing with tenants who are falling behind on payments. In an article from The Star, he explains that “if the tenant owes three months rent, the landlord can say if he pays up, he will give him a half-month deduction. That works.”
As a landlord, you may be wondering; why should you give a discount to someone’s outstanding payments. The truth is, this may be the easier option. Because if you choose to turn this into a legal case - which is still viable - you may not like what you’re about to hear.
Take legal action
When you find yourself reaching this point, then the tenants must have already proven to be a massive headache with no hope of upholding their end of the agreement. It’s not wrong to go after the tenants legally but bear in mind that Malaysia’s legal system is pro-tenant, so as someone who is pursuing what is within their rights as a landlord, you may end up being on the receiving end of this pursuit.
First of all, you have to request the court to repossess your property by issuing a notice of possession. Then you can file a lawsuit under the Specific Relief Act 1950 or the Distress Act 1951. Once the court order is given, you can barge into the property together with a law enforcement officer. But all these come with hefty legal fees and charges.
In case the tenant runs away, the landlord’s option to collect the outstanding payments will be even more limited. First of all, you won’t know precisely how or where to deliver the lawyer's letter of demand and summons to the missing tenant. Although you can hire a private investigator in order to go after the tenant, this process altogether consumes too much time and comes at a high cost with no success guaranteed.
Defending your rights in court takes a lot of energy and resources as well as causing mental and emotional pain in return.
How do you avoid all these in the first place? Just make them pay
The previously mentioned steps are to be considered when dealing with existing delinquent tenants. As the saying goes, prevention is better than cure. You can make the new tenant as the account owner so that they will be fully responsible for their own bills. Just make sure to require them to open their own utility accounts so that they will receive the bills directly (no foul play from the landlord) and they can say time by paying directly to the suppliers. Their failure to pay will consequently affect them without involving the landlord.
So make sure to do the following things before letting a new tenant set foot in your property.
You can make the tenant fully responsible for any delinquencies related to electricity bills in the future by a Change of Tenancy. As TENAGA Nasional Bhd (TNB) advised, landlords should change the name of the account owner (registered user) to the future tenant’s name through this process.
According to TNB, landlords would no longer have to deal with an unpaid bill payment. With the name change, a new tenant of the property will need to sign a new contract with TNB. How to do that? Don’t worry, we’ll guide you through these simple steps!
First, you need the myTNB app where you can easily manage your electricity bills and your TNB account(s) on your mobile device. Once installed, you can either register first or log in. Then proceed with the following steps:
Step 1: Press ‘Add on Electricity Account’.
Step 2: Press ‘Yes’ if you are the account owner, or ‘No’ if you are not the owner of the additional account.
Step 3: If you are not the owner, make sure you have permission to view all of the information on the additional account.
Step 4: Key in the account number or scan the barcode of your bill.
Step 5: For account owners, you can enter your IC Number.
Step 6: For non-account owners with permission to view, enter the account owner's IC Number.
Step 7: Press ‘Add Account’.
Step 8: Press ‘Confirm’.
Water bills, on the other hand, are regulated by state rules of where you live. To demonstrate this approach, here are the steps to monitor your water bills with Air Selangor.
You need to have the Air Selangor app installed on your smartphone first. You can download the app from Google Play or App Store.
Step 1: Tap the ‘I Agree’ button to confirm your agreement.
Step 2: For verification purposes, enter the information required (Name, address, email, phone number, IC/Passport number).
Step 3: Create a strong password.
Step 4: Click ‘sign up’.
Step 5: The phone number you registered earlier will receive a confirmation code that you need to key in upon signing up.
Step 6: Once your account is verified, you can log back in.
Step 7: Select the name and home address registered.
Step 8: A summary of the monthly bill will be displayed in chronological order for easy tracking.
Step 9: You can go into detail on any bill by clicking on it, and the full information will be displayed.
If you prefer a desktop version, you can still do all these steps mentioned above on their portal. Now, monitoring the water consumption on your properties are just a few clicks away.
Don’t forget, you will also need to monitor the bills from the sewerage service provider, Indah Water. Similar to the previous two, it’s really convenient to check into this to make sure that your tenant is accountable for their own utilities use. Download the Indah Water mobile app on Google Play or App Store. Once installed, launch the app.
Step 1: Press ‘Member & eBill registration’.
Step 2: Fill in the ‘Sewerage account number’.
Step 3: Fill in all your personal details (Email address, full name, IC number and phone number).
Step 4: Click Register.
Again, if you prefer not to download the app, you can always do this on their portal. You can also add another account by simply clicking on ‘Manage Account’ and enter the other Sewerage account number. That’s it!
Irresponsible tenants might treat their landlord as collateral, knowing well that the eviction process is highly time-consuming and rarely an option. Now, the authorities will not target you anymore if there is an arrears issue. Instead, the new tenant will become the next subject. Never give them a chance to hold you to ransom!
Avoid illegal route for your own safety
Will there ever be a tenancy act? We do not know for sure. Seeing how Malaysia’s legal environment has strong leanings towards the tenant’s side, being a landlord can be really intimidating. But just because you are trying to get yourself out of the trouble caused by tenants, doesn’t mean you should get into another. Therefore, before you take any action, be sure that what you’re doing is legal and well within your rights as a landlord. It’s also important that you know what arrangements need to be done before renting it to another stranger. Better yet, find a platform where you can list your property with a guarantee that you will get your money on time. That’s why we have Rental On Time Guarantee, which is Instahome’s solutions for our landlords whose tenants are not paying what is due.