Shared houses: how to manage bills, Council Tax and unexpected costs

Shared houses: how to manage bills, Council Tax and unexpected costs

Richard Longmore, managing partner at Hoppy, runs through the essentials of shared house living.

Guest author

Household money

Guest author
Updated on 18 December 2018

Get a written house contract

Living in a shared home, whether a student house or renting with flatmates, can quickly turn sour if rules and responsibilities aren’t clearly established early on between those living in the house.

If divvying up responsibility is overlooked, you run the risk of finding out facts about people far too late in the game - perhaps one of your new flatmates is categorically against washing up or is consistently late with paying bills - neither are good, so establishing some ground rules is crucial to running a happy home.

A good way to get the ball rolling is by creating some house rules that outline each person’s contribution to bills and duties, so no confusion or arguments are borne out of misunderstandings and forgotten promises – it might be a good idea to include dates for extra clarity.

You can even type this up and distribute via email for that extra official touch.

You can find out more about Hoppy and running a shared house here

Rules around subletting to watch out for

Most tenants will rent directly from a landlord or agent, but sometimes it’s possible to rent a room from the tenants already living at the property – this is called subletting.

Legally, subletting can get a bit murky, so if you’re considering subletting a room or space at your property it’s a good idea to check the tenancy agreement first, as that will usually state whether the landlord permits it or not. Click here to read more about tenants' rights.

If the tenancy agreements states that a landlord’s consent is needed before subletting then, typically, landlords will not be able to refuse unreasonably. In most cases, obtaining written permission from the landlord to sublet is best practice as it can help with avoiding potential problems in the future.

It’s important to note that landlords can act to evict any tenants that have broken the terms of a tenancy agreement, in this instance by subletting without permission.

Sharing economy: how to make money from your home

Subletting could get you evicted by your landlord (image: Shutterstock)

Typical bills you will need to split

Unless bills are included in your rent price, you will likely have to split quite a few of them. A typical household will need to work out how best to pay for:

  • water
  • electricity
  • gas
  • Council Tax
  • Broadband
  • TV license and packages

Paying for all this adds up to a sizable chunk of change so it’s important to establish a best practice for how everything will be split so it’s all paid for fairly and on time.

Thankfully tech is here to help, and reduce the typical headaches associated with keeping track of all those bills. One example is Digital Home, a free service provided by Hoppy that will organise the running of a shared home for you.

This nifty piece of tech is an intuitive hub that allows you to track and divide up bills, tasks, and responsibilities by inviting all the members of your household to join. It will even send reminders of upcoming bill dates so there’ll be no more excuses for missed or late payments!

How to reduce your bill payments

Aside from rent, bills will be the second largest home-associated monthly outgoing, but don’t worry, there’s a way to reduce those costs too.

As a tenant, you have the right to switch your utilities provider if you’re the one responsible for paying the bills, but if your bills are included in the rental price then unfortunately you don’t have any wiggle room.

Don’t wait until all those bills start coming in to start the switching process. First, make a list of all the services you’re paying for; typically, this will include broadband, gas, and electricity. Then set aside a day when you or a housemate can do some research on alternative providers and potential savings - perhaps you can make this a group activity for some bonding time!

At first, switching can seem intimidating or a lot of work, but all the details of the switch will be sorted out by your new supplier - all you’ll have to do is make a decision and click a button.

Find out how to switch energy provider and save here

Sharing the kitty

There are some household items that will always need replenishing: cleaning products, tea/coffee, loo roll, and more. You can keep it casual by simply picking up more when you see that items are running low but, realistically, this can get both expensive and annoying.

A fairer way would be to ask every member of the shared home to contribute a small amount (weekly, monthly – decide on this together) to a shared pot that can be used to replenish dwindling supplies.

You can roll-over any unused cash to the next month or use it for something fun like a shared takeaway or drinks to treat each other.

How to split smaller costs with a kitty (image: Shutterstock)

Dealing with unexpected shared costs

Whilst it’s easy to replace small or inexpensive items, you need a plan of action for when something like the fridge or a washing machine break down.

Usually, it is the landlord’s responsibility to replace damaged or broken items but if it’s determined that the item was broken due to misuse, then you may have to pay for a new one (or at least contribute to replacement costs).

Discuss this with everyone in your shared home and come up with an individual contribution that everyone is happy to pay should something pricy need replacement or repair. You can make it official by putting it in writing, so everyone knows they agreed to it when the time comes.

You can have a separate fund to the shared kitty (described above) for these bigger expenses if you’re comfortable keeping cash in the house, though it’s smartest to keep this in a private place rather than shared area.

Alternatively, you can see if someone would be able to pay for it from their account after everyone has transferred them money. Transferring the cash first and paying after will reduce any potential chasing whilst ensuring that the person paying isn’t compromising their finances.

How to build up an emergency savings fund

What to do if a major appliance breaks (image: Shutterstock)

Council Tax exemptions

Everyone over the age of 18, who owns or rents a home is liable to pay Council Tax. A full Council Tax bill will be issued when at least two adults are living in a home, and there are some exceptions that tenants of shared homes need to know about.

You can receive a 25% discount on council tax if no one else in the home counts as an adult. Households where none of the tenants count as adults are eligible to receive a 50% discount.

 The council extends this to individuals that are:

  • On some apprentice schemes
  • 18 and 19-year-olds in full time education
  • Student nurses
  • People with severe mental impairment
  • Diplomats
  • Live-in carers who look after someone who isn’t their partner, spouse, or child under 18
  • Young people under 25 who receive funding from the Skills Funding Agency or Young People’s Learning Agency
  • Foreign language assistants registered with the British Council
  • Children under 18

You won’t have to pay any Council Tax if everyone sharing the house is a full-time student.

Working out exactly how much your household should be paying for Council Tax can be confusing; if your bill looks higher than you expected, or you think you’re eligible for a discount, just get in touch with your council to get a clarification that you’re not paying more than you should.

Richard Longmore is managing partner at Hoppy, a home management website that can divide bills and tasks, whilst enabling you to save on energy, broadband, tradespeople and more. The views expressed in this article do not necessarily represent those of loveMONEY.

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