Five tips before renting to your mates

So, you have a spare room, and a friend or family member needs a place to stay. Naturally, you offer to rent it out to them.

Or maybe you’re the renter, and a friend or family member offers you a spare room. You figure it’s a win-win: They receive a cash flow boost, and you inherit a landlord/housemate who doubles as a friend.

After all, what could possibly go wrong?

Well, a fair bit, as it turns out. Here are five tips to avoid a rental nightmare.

A good idea went terrible.

“Don’t do it,” wrote one friend when I asked about her experience renting from a family member. “WORST THING I EVER DID”.

While she acknowledges the renting was probably a trigger for something that would happen anyway, she remains upset by what happened and was concerned that others might make the same mistake.

“I think in hindsight it was the start of the end of the relationship,” she says. “The renting led to a breaking down of boundaries, and then, ultimately to the breaking of the relationship. We barely speak now.”

So, how can you avoid this kind of relationship breakdown if you’re renting from, or to, friends and family?

1. Think before you jump

Have you heard the old saying, “you don’t know someone until you live with them”?

Anything that irks you about someone isn’t going to vanish when you live together. It’s likely to get worse in close quarters.

So, give the situation and the personalities some thought. Ask yourself: Do we lead similar lifestyles? Which parts of my daily life would annoy my friend or family member? And vice versa? What’s at stake here? What would happen if it did go wrong? Could it ruin our relationship? And what would happen if it did?

2. Sign an agreement

No matter who you rent to or from, and no matter what the reason, always sign a rental agreement. Yes, it may be awkward to negotiate initially, but the consequences could be far more damaging.

If you get it right from the start, living with friends and family can be a great experience, and one you might repeat.

For instance, Leona told us about a couple she knew who moved in together not long after they had first got together.

It was the woman’s apartment, and so she had her boyfriend sign a rental agreement because she didn’t know anything about his living habits.

“They said it was awkward at first, but it saved any potential resentment or misunderstandings,” Leona says.

It ended up working out well. So well that, several years later, the same couple lived with the man’s mother for about eight months and, before they did, signed another agreement outlining their living arrangements.

3. Outline the ground rules

Getting everything right at the start is crucial to any rental relationship.

Barri rented from a friend-landlord and said that outlining the ground rules was one of the main reasons they lived together happily.

“We were living together, so it was as much about living with friends as the landlord/tenant relationship,” he says.

Barri recommends sitting down and setting out the ground rules before doing it. Not just the financials, but any house rules – like when it’s ok to have people over, or how you split the housework.

“Try not to do this in the pub, and give each other time to think on it, after first talking,” Barri says. “Put it in writing and get a witness.”

4. Respect the financial transaction

Renting from anyone – friend, family, or stranger – is a financial transaction. So treat it like one. Keep money front of mind, and don’t avoid discussing it.

“Don’t ask for any favours with rent or bills,” Barri says. “It puts horrible pressure on your friend-landlord, as they feel they have to agree, and then if you don’t pay, they’re in a horrible position, putting the whole relationship into jeopardy.”

“And, from the tenant side, it’s essential to think about your friend’s financial commitments here,” Barri says. “It’s their mortgage at risk, not yours.”

Always pay rent and bills on time. And create a kitty for day-to-day expenses like household shopping, cleaning, supplies etc.

“Friends or family constantly having to ask for money from each other is just awkward and unnecessary,” Barri says.

5. Take away the most common friction points

Living with someone, it doesn’t take long to work out what your friction points will be. Once you work them out, take steps to solve them before they get out of hand, to avert a relationship breakdown.

No matter your age, gender, or who you’re living with or renting from, the most common share house complaints (other than money) are about cleanliness and who ate all the food.

“Get rid of those stupid arguments about housework,” Barri says. “If you can afford it, get a cleaner. If you can’t afford it, keep a rota and stick to it no matter what.”

Barri also suggests getting a regular primary shop sorted to be delivered to eliminate those arguments about who finished the milk.

And finally…

Like any relationship, communication is everything when you’re living with friends or family, so make sure you think it through, talk about it, and have an escape plan in place to prevent things from going pear-shaped.

New data reveals how flatmates feel about sharing

Over 10,000 people who had been members of the site since 2019 were surveyed, and there were several key findings.

Sharing is a necessity for most.

The majority of flatmates share because they can’t afford to live by themselves. 52% said they share as they can’t afford to rent alone, and a further 21% said they share to save money.

It’s no secret that the costs of living and renting in the inner-city are high, so how do flatmates and renters save?

75% said that they rent out their spare bedrooms to help pay off their mortgage for those who do own their home.

Of the flatmates surveyed, 55% would like to buy into the Australian Dream and own their own home one day.

However, half of these respondents also believe homeownership isn’t accessible.

Food delivery is a must.

Rent may be pricey, but it appears there’s always enough cash for food delivery.

Of the 10,000 surveyed, 73% said they couldn’t afford to rent by themselves, but 52% said they would order food delivery at least once a week and 20% ordering two to three times per week.

Maybe these flatmates could cook a meal together?

Forget stranger danger

There’s no shortage of stories when it comes to friendship breakdowns after moving in together. Maybe Hannah seemed the pinnacle of hygiene when you were at uni, but now you realise she never does the dishes or scrubs the bathroom floor.

It’s no wonder that the survey found 47% of flatmates think strangers make the best housemates.

Lack of cleanliness is also the biggest bugbear for flatmates, with 50% saying it was the single most annoying thing about living in or managing a shared home.

Locking in a rental or flatmate is the foremost hurdle

When a good rental or share house comes on the market, it doesn’t last for long. 30% of respondents in the survey found that competition and lack of options were the most frustrating part of locating a share house or flatmate.

It’s important to click with your new flatmate, but when you have to choose quickly to avoid paying double rent, it can result in picking the wrong one.

This could be why one in five felt like they ‘settled’ on a flatmate or home.

How to evict a housemate

Wouldn’t it be nice if we could all just get along?

Sadly, when you’re living under the same roof as someone else, it’s not always that easy, and share houses are the source of endless tales of nightmare housemates who leave a trail of filth wherever they go, or worse, refuse to pay their rent.

Sometimes if tensions escalate or conflicts can’t be resolved, you’ll want to get a housemate out of your house as quickly as possible.

So how do you evict someone who’s living with you?

Not surprisingly, it’s not always an easy process, as co-tenants and sub-tenants effectively have the same rights to continue living in the house as you do.

But some options can help resolve the situation.

Talk it through

Of course, the most straightforward course of action is to have a frank but civil discussion between all housemates. You may even be able to resolve the issues amicably and agree to continue living together, which will negate a lot of extra hassle and paperwork. If not, in an ideal world, the housemate in question will accept the situation is untenable and agree to move out.

Problem solved. You’ll now need to notify the landlord and put in a request to vary the lease to remove your housemate’s name from it, as well as adding any new tenants who fill the soon-to-be vacant room.

It’s worth remembering that if it’s purely personal differences that have you at each other’s throats, your co-tenant is under no obligation to go anywhere and is entitled to see out the agreed rental term. If they can tolerate living in a tension-filled home, there’s not a lot you can do.

Seek mediation

If you’re unable to resolve the situation yourselves, getting assistance through a mediator is also an option.

Sydney’s Redfern Legal Centre suggests seeking help at a community justice centre to facilitate a discussion between both parties, which may include your housemate agreeing to move out.

Issue a notice to vacate

Suppose you’re the head tenant and your housemate is a sub-tenant, effectively. In that case, you’re their landlord, so if they’ve breached their tenancy agreement in any way, you should be able to issue a notice to vacate – attainable from your state’s consumer body – citing those reasons.

Depending on the cause of the breach (and the state you reside in), the sub-tenant will have a certain amount of time to vacate. For example, in Victoria, it ranges from an immediate eviction to 120 days.

If your housemate doesn’t comply with the notice, you can apply to have the matter heard in court.

Get a termination order.

In most states, you can legally apply to your state’s civil and administrative tribunal (i.e. NCAT or VCAT) for an order terminating your housemate’s tenancy.

The tribunal can make orders, including forcing tenants to comply with their rental agreement, as well as terminating their tenancy. Still, you’ll have to prove or convince the tribunal member that the circumstances warrant it.

Even then, it’s unlikely to deliver you a quick fix.

In New South Wales, if your housemate is a sub-tenant on an open-ended agreement, they’ll likely still have 90 days to vacate the property even after you secure an order to evict them.

Take it to court

If a termination order doesn’t work and all other avenues have been exhausted, you can apply to have the matter heard by your state’s tribunal.

It will cost you a small fee, and you’ll be required to attend a hearing, where a tribunal member will make an enforceable decision on the tenancy.

Should your housemate still refuse to comply, the tribunal can order the sheriff to evict them forcefully.

Why your housemate’s pet is the best kind you can have

Bessie Hassan, a pet insurance expert at the price comparison website https://www.finder.com.au/pet-insurance, explains the benefits of sharing a home with someone who has a furry friend.

Dogs, for example, can be a great early-morning running buddy, or a cat can be a lovely couch companion on a cold night.

 

“Caring for your housemate’s dog or cat, instead of having your own, is a great way to enjoy and contribute towards having a pet without too much concern for the nitty-gritty, such as vaccinations or giving medication,” she says.

“Although you may help out with general chores, at the end of the day, the burden of owning the pet doesn’t fall on you, so it’s a win-win,” Hassan says.

That means local council registration, food, pet insurance, routine vet appointments, and other expenses come out of the housemate’s pocket.

Hassan says living with a pet can be beneficial for those thinking of getting their animal companion.

“Living with a housemate’s pet is a great way to understand and learn the responsibilities that go hand-in-hand with pet ownership,” she says.

“Many people may not realise the financial commitment involved in having a cat or dog, so those thinking about it should carefully assess whether they can afford the ongoing expenses before diving in head-first,” she says.

The drawbacks? Ultimately, it’s someone else’s animal, Hassan says.

“The biggest downside is probably that, unfortunately, if your housemate moves out, so does the pet. Also, any big decisions – from choosing a name to its diet – probably won’t be up to you,” Hassan says.

Best apps for splitting bills among housemates

Easy to share the bills

Made specifically for share houses, Easyshare is simple to use.

First, download the app, add payment details (credit or debit card or direct debit) and invite housemates to join.

Then, input the bill, each person’s share, and the details of the organisation being paid, and Easyshare will split the bill and make the necessary payments. It works for rent and other shared expenses such as power and internet.

The app also manages IOUs – for instance, when someone needs to be reimbursed for the grocery shopping. Easyshare will get the user’s permission to debit their account before honouring a housemate’s IOU request.

The app is free but takes a 1.5 per cent fee for each transaction (2.5 per cent for Amex). Users also have to pay standard credit card charges.

Payments in a snap

Splitr uses photos of printed bills to split the cost between housemates. It relies on one person paying the bill and then seeking reimbursements, essentially IOUs. To set up, the app is downloaded and payment details provided.

Take a photo of a printed bill or invoice using a smartphone and open the image immediately in the app, or upload it later from the phone’s photo album. The app’s “optical character recognition” reads the total cost, as well the individual items and their specific amounts.

Even splits are more straightforward, but for itemised accounts, the user can drag and drop to assign specific costs to specific people – meaning the champagne drinker pays their way at house parties.

Splitr allows transfers via credit card and direct debit, but not via Amex.

Wise up to bill splits

Splitwise is a somewhat more mature offering, featuring “fairness calculators” and mediation services. It’s also available online, as well as on smartphones.

Again, get started by entering payment options and the people who will be splitting the bills.

When a bill arrives, input the info into the app and indicate who needs to pay what. As well as being able to produce a single IOU, Splitwise uses an online ledger system to keep track of who owes who what and allows users to pay larger one-off sums, preventing unnecessary back and forth between users.

Based on crowdsourced data, Splitwise’s fairness calculators work out how rent should be divided, based on room size, features such as aircon, and whether a room has a shared or private bathroom.

Splitwise is free to download and use, except for regular banking/credit card fees, with the company raising money from advertising.

It’s a cinch

Finch differs from similar options by providing a Finch account, which users can add funds to and the standard credit/debit card and direct debit options. Those making payments from their Finch account avoid the 2.4 per cent transaction fee.

For share houses, start by downloading the app, adding payment details and setting up a “household group”. The app offers instant transfers between users, a bill splitting option and group tabs.

With an emphasis on assisting Gen Y with its finances, app users can also get “actionable financial insights” to keep their budget on track.

Finch will only transfer money between Finch users, but users can send an IOU to a non-user’s phone, encouraging them to sign up.

 

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