Load Shedding and Property Ownership
POWERING THROUGH: PROPERTY AND ESKOM LOAD SHEDDING
Having just emerged from Stage 4 load shedding – and with the ever-prevalent concern that it will recommence at any time – these are dark days for the national energy provider. In addition, while it is difficult to forecast how and when load shedding will be implemented in future, it is predicted that load shedding will remain, if not worsen, in the short term.
Load shedding affects our lives in myriad ways, but what bearing does it have on property? In this blog, Property.CoZa gives a complete guide to load shedding, what it means for the property market, homeowners, property to rent, property to let, and property for sale. We also cover some important considerations around load shedding for homeowners and give some helpful tips to lighten the burden of Eskom Stage 4 load shedding and the other stages on the roster.
WHAT DOES LOAD SHEDDING MEAN FOR THE PROPERTY SECTOR?
The property market is defined by a variety of influencing factors. On the one hand, we are navigating the 2021 load shedding effects against the backdrop of record-low interest rates. In fact, it is generally a buyer’s market – affected in part by the ripples of lockdown’s work-from-home culture and affordable house prices.
However, load shedding presents many insurmountable challenges for prospective property buyers. It has many dire economic and financial consequences, which have a knock-on effect on the property sector. Every industry experiences the impact of load shedding which, in turn, affects production and supply. This has a bearing on employment and can even lead to stagnant disposable incomes within households – a distinct barrier to property buying.
There is also an increased likelihood of emigrations and a bleak outlook that reduces the chance of foreign investment. Ultimately, the property market is predominantly guided by the state of the economy and, at its very core, load shedding is damaging to the country’s investor sentiment.
PROPERTY FOR SALE, PROPERTY TO LET, PROPERTY TO RENT: CONSIDERATIONS FOR BUYERS, SELLERS, RENTERS
Load shedding results in job losses
According to Moneyweb, citing research from PwC, it is anticipated that this latest spell of load shedding will result in at least 350 000 job losses. They’ve also reported that load shedding is responsible for one million job losses in the country.
Load shedding increases the cost of running a household
An increased cost of living affects the affordability of property for anyone considering a future property investment. More often than not, this puts the brakes on property plans for many people. For those who are undeterred, there is a trend towards smaller, more cost-effective properties off the back of these increased costs – as well as increased interest in renewable or alternative energy sources.
Buyer hesitation and the effect on property to rent
While increased living costs often have a stalling effect on plans to buy property, this – conversely – means strength for the property rental market. This, of course, comes with its own challenges around rental amounts and how to manage the cost of energy for tenants.
Commercial property and the productivity lull
When it comes to commercial property, the long-term consequences of lockdowns and hindered productivity from load shedding make for the perfect storm. Property to let is to be found largely vacant and buy-to-let property investments become less attractive to local and international investors.
Following lockdown, many businesses tried to secure shorter leases to buffer uncertainty – which, naturally, meant higher rental prices for landlord security. Landlords also face enhanced competition in trying to fill empty properties. Going into 2021, industrial rentals were under enormous pressure – a situation that has been exacerbated by load shedding and the challenges it creates for businesses.
With many enterprises looking to renewable and alternative energy sources for business continuity, these account for burgeoning rentals in the commercial space. The risk is that this feeds into a growing number of vacant rentals and landlord competition.
Emigration sales and property options
Load shedding and its related challenges influence the thinking behind emigrations. Together with the riots and looting earlier in the year and the pressures placed on individuals and businesses from restrictive lockdowns, elevated emigrations are to be expected. This means a range of properties on the market, with real power of negotiability around price off the back of short time frames. While this is good for the local buying market, it is a factor that may negatively impact foreign investor sentiment.
Browse property for sale, property to rent, and property to let on Property.CoZa.
HOW DOES ESKOM LOAD SHEDDING AFFECT HOUSEHOLDS? PREPARE FOR LOAD SHEDDING WITH OUR PROPERTY OWNER’S GUIDE
The Power to Plan: Know the Schedule
Whether you’re working around your child’s exam study schedule or trying to strategise around maximising up-time at work, use the Eskom load shedding schedule as the foundation of your daily and weekly planning.
Explore Powerful Energy Alternatives
Load shedding accelerates interest in the move towards greener renewable energy sources – naturally! Property owners are looking to solar solutions and generators as a way to keep the lights on. These powerful alternatives may be costly at the outset, there is potential for a meaningful return on investment when it comes to powering properties. In commercial and rental properties, these features have strong marketable appeal. Many landlords will recoup the expense of these energy solutions through elevated rentals – again, a factor that has an impact on tenants, as touched on above.
If you are looking at generators as a back-up and you live in a sectional title complex, find out provisions relating to generators from your body corporate.
Water and Electricity
In some areas, load shedding brings water disruptions as well as power outages. Store at least enough water to drink in case of supply issues.
Factor Delays into Your Days
Power cuts mean delays. From congested traffic lights and accidents to airport delays, it is prudent to give yourself extra time to arrive at school drop-offs, the airport, and business meetings for instance.
Purge the Risks of Surges
If you are expecting load shedding, prepare by shutting down electronic appliances, as well as your geysers and pool pump. Invest in surge arrester plugs and UPSes for those unexpected outages and surges.
Prevent a Security Blackout
Load shedding provides the perfect opportunity for criminal activity. Regularly check the battery systems on gates, garages, and alarm systems. While this is simple good practice, it is also a requirement on some insurance policies – an important factor to keep in mind if you need to claim in future.
The Assurance of Insurance
Take the time to read through the provisions of your insurance policy around, as mentioned above, your security requirements – but look a little deeper too. Power congestions can damage electronic equipment but may require special cover under your insurance policy. What does the policy say about load shedding? Talk to your broker or insurance company to find out if you have the cover you require.
Empowering Your Daily Routine
For many households, load shedding gets in the way of our daily routines of cooking, cleaning, and enjoying our day-to-day activities at home. Interrogate how you are going to cook and heat water during periods of load shedding. Whether you invest in a generator or solar power or sit it out with battery-powered lamps and candles, good preparation will take a load off the stresses of load shedding.
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LOAD SHEDDING AND PROPERTY: FREQUENTLY ASKED QUESTIONS
How does load shedding affect the residential market?
Generally speaking, the residential property market follows the state of the economy. With an estimated 1 million job losses attributed to load shedding, the negative effects of load shedding permeate the property sector.
How many hours is Stage 4 load shedding?
Eskom’s Stage 4 load shedding aims to shed 4 000MW of electricity usage from the grid. This means consumers can expect energy cuts 12 times over four days for two hours at a time or 12 times over eight days for four hours at a time in affected areas.
What are the consequences of load shedding?
As so many elements of our lives are power-reliant, the consequences of load shedding are widespread. Commercially, businesses face disruptions, supply chain delays, affected profitability, and job losses. However, disruptions are felt within healthcare, education, traffic, and many other sectors too. The result is a cost of millions of rands to the nation and slowed economic growth.