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Budgeting and Sharing Costs While Renting

published on 02/01/2019  

You may have been renting for years or this could be your first time, but especially in places like London it is extremely common to rent with friends or even strangers. One thing that you always need to be aware of is the financial implications of taking on a new lease and how this will work with the other people that you will be living with.

It’s important to be organised with money when sharing a property. If you miss a payment or don’t pay your bills on time, this can lead to getting a bad credit rating, which will make it difficult for you to borrow money in the future.

If you aren’t sure then we have provided a list of common bills you will need to budget for:

  • Council Tax (England, Scotland & Wales - usually paid monthly)
  • Gas and electricity bills (paid either by a pre-payment meter, monthly by Direct Debit or quarterly)
  • Water bills (check with your water company about how often you will receive bills)
  • TV licence (monthly or annually)
  • Contents insurance (paid monthly or annually)
  • Landline phone bill (plus any connection charges – can be paid quarterly or monthly)
  • Work out how to share your bills

If you do end up sharing with others, it is very important to work out how to share your bills. At the start of a shared tenancy, it’s a great idea to sit down with your housemates to work out a fair system for sharing the cost of your bills and ensure they’re always paid on time.

Write down a list of the shared bills you’ll each need to contribute to and then estimate how much they will be every month. (Your landlord might be able to help you with the estimates)

Add up the total cost of these bills and work out a method for dividing it so each housemate pays their fair share. It might be helpful to draw up a spreadsheet showing exactly what each person needs to pay into the ‘pot’ to cover the monthly/quarterly bills.

The cheapest and most simple way to pay your household bills, is by Direct Debit. You’ll also have peace of mind the bills will always be paid on time, provided there’s sufficient money in the bill payer’s account when payments are due.

Set up a joint current account just for paying the household bills each housemate pays their share into – and set up your Direct Debits from there. Only consider this option with close and trusted friends. Nominate one person to be the designated bill payer who will pay all the bills from their personal account. Everyone then sets up a standing order to pay their share into the nominated bill payer’s account each month.

Make sure standing orders are set up to transfer funds to the bill payer’s account a few days in advance of the Direct Debit date, to avoid problems if there are unforeseen delays with the transfers. Tags: Budgeting, Renting