Whether you know the people you will be living with or not, there is a lot to think about when you move into a shared rental property.
Is there a cleaning rota? When's bin collection day?
However, one of the most important questions will likely be how to work out and split bills. Establishing this early on can ensure you have a smooth relationship with your housemates and even help you avoid financial difficulties because of miscommunication.
If you have joined an existing house share, there may already be a process that you can slot into, but it's important that you feel comfortable discussing how the bills are split. It's also essential that you have a clear understanding of how much you need to pay each month. You'll probably already have your own personal bills to pay, such as your mobile phone contract and tenants insurance, so you'll want to know your monthly outgoings.
To help you work out your payments, we've created a guide on what to cover and the ways you can approach this;
What are the main bills to pay?
As well as establishing how to work out your gas and electricity bills, there are a few more outgoings to be aware of. Before you discuss the bills with your housemates, it's worth having a list of what you are all responsible for so that you can go through each of them.
- Rent - Depending on the type of house you have moved into, you may have to share the rent between your housemates.
- Utilities, i.e. Gas, Electricity, Water
- Council tax
- TV licence
- Internet provider
How you pay for these, and the amount you pay will depend on the current process in place in your new property. Once you know how these bills are covered, you can establish an appropriate way to split them.
Who is responsible for the bills?
Start by having a conversation with your fellow tenants as soon as possible, so you know what the current processes are or, if you're all moving in simultaneously, what they're likely to be. Here's a look at how the key bills can work for your house share.
Splitting the rent
Whether you have moved in with friends at the same time or you've joined an existing house share, one of the most important bills to focus on is the rent. Unless you and your housemates each pay your own allotted rent to your landlord each month, the rent you pay will need to be split between you.
The most important step is to make sure that you know who is named on the tenancy agreement. Is it sole or joint tenancy? A sole tenancy is where one tenant is named on the agreement, while a joint tenancy is where two or more people are named. In most cases, a shared house will name all of the tenants living there, but there are instances where this can become complicated. If, for example, you are moving into a room and picking up someone else's tenancy, you will need to ensure you are named in their place. Your landlord or letting agent will usually take care of this, but it's important to check.
Once you know what type of tenancy it is, you'll need to decide how to split the rent. Usually, the monthly rent is divided equally between the housemates. While this could seem like the most balanced approach, you might be moving into a smaller bedroom than the others, or you could be getting the better deal by moving into the room with the en-suite, which could be unfair as one tenant benefits more than another. In this case, you might need to spend some time with your housemates to decide what is a reasonable price to pay for each room. As long as the final figure adds up to the amount asked for by your landlord, this can be the best approach.
How to pay bills in a shared house
In some house shares, the landlord might cover the cost of the utility bills in the rent. However, it's more common for housemates to share out the cost of these and take responsibility for organising them.
When splitting bills in a shared house, it's worth arranging a separate conversation with your housemates to the one about rent. This keeps everything clear.
You'll need to decide who will be the named person on the account. If you've moved into a house share, this might already be set up with the current housemates, or it could be that you pick up where the previous tenant left off in being responsible for one of the bills. Like the rent, you must have this conversation with your fellow tenants early to ensure everyone knows who will oversee the TV licence and who will take care of the gas bill.
The bill payer on each account must make sure that they've set up a direct debit with the provider and that each of their housemates remembers to pay every month or quarter, depending on when the bill is due. To make this process as simple as possible, there are a few ways to manage these payments.
Setting up a shared spreadsheet is a great way to track when bills are due and how much everyone needs to pay in. It can be updated to reflect any changes, such as if you've overpaid and your electricity account is in credit or if the tariff is set to switch.
There are several bill-splitting apps that are designed to make sharing the cost of monthly outgoings easier and less awkward. Acasa, for instance, is a free app that helps split payments and budget for other household expenses. Search for highly rated bill-sharing apps and try some of the free ones to see what works for your household. They can be a great way to check in on bills at work or on your commute.
Generally, getting a joint bank account with fellow tenants is not advisable as it could affect your credit score if one of the named housemates on the account misses a payment. Plus, there is risk involved here, as you will all have access to the account so money can be added and withdrawn at any time. This is only an option if you're moving in with a partner you intend to continue sharing finances with.
What if payments are missed?
Missing payments on some utility bills can lead to fines and potentially a bad credit rating for the named person on the account. So, should a housemate leave without paying their share of the electricity bill, for example, the named person would be affected.
They would have to find the funds to cover the amount the ex-housemate didn't pay. Therefore, whoever is named on each account must ensure payments are made in full and on time. It's also a good idea to sign up to one of the sites offering free credit reports, such as TotallyMoney, so you can keep an eye on your credit score.
Can we switch providers in a shared house?
As tenants responsible for their own bills, you and your housemates can choose your supplier.
Search for better energy deals and browse the offers from broadband providers. If you spot anything that could help reduce your monthly outgoings, chat with your housemates, and together you can make the switch. Keeping the bargains in mind when planning how to divide bills in a shared house can be key to getting a great deal for you all.
Make it smooth
Whenever someone moves out, and a new tenant moves in, there's sure to be a crossover period. This means that you must ensure the person leaving settles their bills before they go, and the new housemate is ready to start paying in.
Having regular conversations with your housemates about how you all manage the bills is one way to make sure the times of transition are smooth and straightforward. In addition, the new person might have some great ideas to help make bill-paying easier.
Ultimately, working out the finances in a house share requires everyone to know who is responsible for each account and make sure that they pay their bills on time to avoid any issues for the whole household.