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Water companies struggle with bad debts
A draft report will be published in the next few weeks which will propose a new way in which water companies may collect their outstanding debt owed by customers. Residential landlords could be held responsible for non payment of their tenant’s water bills when they leave.
Landlords have hit back at the proposals in the Walker review as an “alarming prospect” and that it could force them to push up rents.
Water companies have witnessed a rise in bad debts and plunging profits. Water suppliers are not allowed to disconnect water and sewage supplies due to non payment of bills and so are particularly vulnerable to bad debts.
Many water companies complain that by the time they are able to investigate the non payers, they have moved out of the property. Recent research for a company providing debt liquidation solutions found that as many a 1.1 million homes or 5% of all householders may default on their water bills in 2009 and this would add a significant amount to water companies’ already growing bad debt figure which has already grown by 11% during 2008.
Ofwat have drawn up the proposals for landlord’s liability to tenant’s debts to water companies and say they would like to require property owners or managing agents to identify who the “liable” person is. The new rules would require primary legislation to give landlords an incentive to provide details for the tenant or face paying the bill themselves.
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