Smart money moves for flatmates to avoid share-house hell

If you're on the verge of moving, check out these tips to ensure your experience is a good one.

Furniture going begging on the kerbside and no car to get it home? Not a problem. When you're a group of five 19-year-olds who have just moved into a share house, you just wheel it home on your skateboards.

"Our lounge is fully furnished and we didn't pay a cent for any of it," says Harry Gregg, a political economy student. Signing a lease in December came in handy too. "My Christmas present I got nothing but a fridge; someone else got a washing machine."

As the academic year cranks up, many university students like Harry and his mates, Arlo, Isaac, Nikita and Tom, will be moving into their first share house.

For Harry, part of the motivation was cutting living expenses. "My first year out of home I moved into student accommodation but it was becoming ridiculously expensive," he says, adding it was $304 per week including bills.

As first-time renters, it took about a month to land a place in Sydney's inner west, but when they did, it was cheaper than they had hoped. "Our preferred figure per person was about $200 a week, maximum $220, and we are very lucky that we are only paying $180."

House rules include splitting bills equally and buying their own groceries. But they haven't discussed what to do if someone falls behind on their rent.

"I suppose we would do our best to support them," he says, adding: "I guess we are lucky in that everyone in our house has either Centrelink or parental backing if they lose their job."

Money issues can be the reason share houses fall apart. Yet a 2015 study by QUT academics, Dr Chrisann Lee and Dr Laura de Zwaan, found first-year university students are often not well-equipped with financial literacy skills.

"There was a high proportion of students where there wasn't much training at all when they were in school so they were calling out for some help when they got to the university setting," says Lee.

Last year QUT ran three workshops to help equip students with budgeting skills, and Lee and her colleagues are advocating that financial literacy should be among the generic skills taught to university students.

ANU offers courses each semester for students looking to live independently, particularly those moving from campus accommodation to commercial rental properties.

Often, though, lessons are learned the hard way. If you're on the verge of moving, how do you ensure your first experience is share-house heaven not hell?

1) Understand what you're signing

Yaelle Caspi, policy officer, Tenants Union of Victoria, says students need to be mindful of the legal implications of entering into a new lease with the other members of the share house.

"Where all names are on the lease … all of the tenants are going to be equally responsible for any loss or damage that is suffered by the landlord down the track. If one tenant doesn't pay their rent or damages the property, all of the tenants under that agreement are going to be held liable."

Discuss with your flatmates how rent is going to be divided and paid. Harry and Arlo opened a joint account for their share house and all rent money is transferred by direct debit into the agent's account.

The bond should be registered with the Rental Bond Board in NSW or the Residential Tenancies Bond Authority in Victoria.

Where things can get trickier is if you enter into an "informal" living arrangement, taking a room in a share house sometimes with people you don't know. In that case, Sophie Erpicum, the off-campus housing officer at UTS in Sydney, advises students to find out who is the head tenant (the person leasing the place from the landlord).

"Check the ID of the person who is renting out the room; have a look at the initial contract and ensure that the head tenant has got the approval from the landlord to sub-lease the room."

If so, the student can be added to the contract and the bond lodged with the relevant authority.

Sometimes students only realise they are inadequately protected when they move out. "The main issue that comes up every year is the bond refund," says Erpicum. Either they may not have a receipt for the bond or the receipt may not have sufficient details such as who the money was paid to; the date; or the signatures of both parties.

It is also difficult if there is no written agreement. "They've paid rent, they didn't actually get any receipts for any payment and then we have to help them prove that they have made payments and try and help them get their bond back, for example."

To protect yourself: get a written agreement with the leaseholder that indicates the rent you will be paying; get detailed receipts for any bond paid and pay rent via electronic transfer, not in cash. Erpicum also suggests keeping any text messages and confirming any verbal agreements via email.

2) Fill in the condition report carefully

When you're caught up in the excitement of moving, it can be easy to overlook the condition report. But it can determine whether you get your entire bond back when you move out.

Caspi recommends photographing any existing damage to the property when you move in. If damage occurs, raise the subject of payment with the culprit before they move out. "Otherwise they are going to move on and you might be held liable for it after that."

3) Choose flatmates wisely

A flatmate who falls behind on their rent can have serious consequences for the entire house. As rent is paid two weeks in advance it is considered in arrears if it is not paid on the due date. Caspi says if it is in arrears for 14 days or more then in Victoria all the tenants on the lease could be served a notice to vacate for late payment. In NSW, a non-payment termination notice can be given.

"That can be something which is very difficult for young people who might not have many previous experiences of renting and would be relying on that reference to be able to gain a new tenancy," says Caspi.

4) Discuss other bills arrangements

If your name is on utility bills you are legally responsible for paying those bills. So agree on a system for how household bills will be divided and paid. Sharing the cost of food might make sense if you all plan to cook and eat together. Even if you're going solo, set up a house kitty for things like toilet paper and cleaning products.

5) Exit strategy

Obviously life happens. A flatmate can drop out of university or prefer to live elsewhere. When it comes to a change in circumstances the law can differ from state to state, says Caspi.

In Victoria, for instance, she says, you can ask a landlord if you want to sub-let or transfer the lease into one new name, or multiple names, because of a change in circumstances and they can't unreasonably refuse that.

"If you've got a suitable replacement it can be as easy as that and just transferring over those names."

If you are moving on, Caspi says: "It's important to make sure that you get your name removed from the tenancy agreement or you will remain liable for any loss or damage that occurs after you've left." Make sure that the bond is transferred using a bond transfer form and your name is removed from utility bills.

 

This article was originally published by the Sydney Morning Herald on 10 February 2017. It represents the views of the author only and does not necessarily reflect the views of AMP.

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