Navigate your way through share housing without any financial consequences
We’ve all lived in share houses before and had to go through the agony of splitting bills with unreliable housemates. But there can be major consequences if a bill isn’t paid on time, especially if it’s in your name.
So, how do you avoid these money pitfalls and ensure your credit history is protected? Here are some tips to help you navigate your way through share housing without creating any conflicts or financial consequences.
1. When you first move in, always get a receipt for any bond or rent you pay!
This is a common mistake and one I’ve come across often with friends and family members over the years.
When you move into a share house, and don’t deal directly with a real estate agent, it can be all too easy to give your housemates money for rent or the bond without making sure you have any proof of payment. The best way to avoid this is to use internet banking and properly name all money transfers.
When it comes to your bond, make sure you always fill out the Tenant Transfer form from the Residential Tenancies Bond Authority (RTBA) to change ownership of the bond from the previous tenant.
The RBTA takes no responsibility for monies transferred between private parties, so without this document you have no legal rights to claim your bond when it comes time to move. You could also be fined by the RTBA for failing to submit it.
2. To have your name on the lease or not?
In many share house situations signing a lease isn’t always necessary. There are both positive and negative points to this.
It’s a serious commitment and, if things don’t go according to plan, you could be left with a poor rental reference or with the full brunt of the rent if someone unexpectedly moves out.
On the other hand, if you pay your rent on time and have no issues with the real estate agent your rental payments can act as proof of good credit behaviour, which could be beneficial when it comes time to obtaining credit.
3. Put a system in place!
The best way to name and shame those in the house who haven’t contributed to bills is to have a physical house kitty, like a jar, which each tenant contributes to every month.
Use a whiteboard to show how much everyone owes and keep it in a common area, like the kitchen. Once you’ve paid-up, send a text message to the person paying the bill to let them know. A friend of mine did this and had great success.
4. If bills are in your name always pay them on time
The nature of share housing is that one person will always be listed on specific household bills such as internet, gas or electricity. The difficulty this creates is when one housemate doesn’t contribute any money.
What most people don’t realise is, if you don’t pay your utility bills on time you could receive a default which will appear on your credit history and impact your ability to borrow money down the track.
The simplest thing, like signing up to a phone plan, could be off-limits if your credit history is impaired.
The easiest way to get around this is to set up an automatic transfer every month, even if it means paying the whole bill yourself and collecting the cash from your roommates later.
5. When it comes time to move, take your name off the bills!
When the time comes to rid yourself of your current pesky housemates the most important thing you need to do is get your name off any household utility accounts. Call your gas, power or internet service provider directly to check this.
Whatever you do, don’t leave this job to your housemates. They may not do anything and if they fail to pay a bill a black mark could appear on your credit history – without you even realising.
If you can’t be found to make payment the debt will be sold-off to a credit collector and begin to generate large fees and interest.
The next time you try to borrow money this will appear on your credit file and you may find it very difficult to receive approval.
Non-bank lenders may consider your application, even with poor credit history, but you will still need to pay the outstanding amount before you can proceed with obtaining credit.
If you’re worried it’s too late, and you want to know your score, go to mycreditfile.com.au or the credit reporting authority veda.com.au.
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