First time renters: how to pay bills etc safely

7sefton

Hi,

We're a group of 4 university friends renting a house in London for the first time. Unfortunately we're fairly ignorant in renting (we lived in university halls for 3 years and didn't rent on the private market).

We anticipate many bills need to be paid regularly, eg.:

Rent (£600 per week)
Utility bills (I'm guessing water, gas, electricity, broadband)
Other costs (Council tax, TV licence, etc)

Can anyone advise of a system we can use to ensure all these costs are paid on time and efficiently, without falling into any pitfalls (such as being linked to each other's credit rating). We also want to avoid one single person taking responsibility for absolutely everything - we'll all be really busy and nobody has time to dedicate to weekly bill paying.

Thanks for any guidance - it will be so appreciated.

dkmax_2

7sefton wrote: »

Can anyone advise of a system we can use to ensure all these costs are paid on time and efficiently, without falling into any pitfalls (such as being linked to each other's credit rating). We also want to avoid one single person taking responsibility for absolutely everything - we'll all be really busy and nobody has time to dedicate to weekly bill paying..

Get a so-called basic bank account (one without any credit facility) in joint names. Make sure that at least two signatories are required to operate the account and do not have debit cards issued. Credit the account with a security deposit from each person (which then doubles up as an initial float), then monthly to cover outgoings. Pay all bills by direct debit. Online access may be too risky so avoid if possible.

Draw up a simple contract specifying the purpose and scope of the account, what happens if someone misses their monthly payment, how the money is split when closed etc. At any sign of trouble cancel the joint mandate with the bank.

As with all such arrangements you should assume that someone will attempt to defraud the others so bear this in mind when signing the mandate, drawing up the contract etc. Don't let the deposit money be eroded as then the incentive for 'good behaviour' is reduced.

Sharon87

Don't do joint accounts! Your credit histories would be linked. I have shared in loads of houses, at uni we handled 1 or 2 bills each and worked it out from then. But currently I hold the shared account, all bills and rent go in and out of it, and I take charge of them (good at moneysaving thanks to here). That would mean you put your trust in that person who has the account.

What we do is add up how much the bills cost then divide it between the 5 of us and pay that amount with the rent.

Doing it individually will mean you need to just ask for the money from each housemate as and when the bill comes out.

pinkshoes

DO NOT get any sort of shared account!!

Put one bill in each name, and each of you are responsible for one bill.

It's actually easier to get a quarterly bill then pay it rather than have a direct debit, as although a dd is cheaper, it can often leave you out of pocket at the end of the year if it's been underestimated, and you then owe money on it!

Always best to all put £1 into a kitchen jar every week, which can then be spent on loo roll, washing up liquid, cleaning products etc...

7sefton

Sorry to bump this up again - and thanks for the useful replies so far.

About the joint account issue: surely if we get a basic account there is no risk of credit histories being contaminated, because the account cannot go overdrawn?

My reason for preferring a joint account is that if we are all responsible for just one bill, it must be difficult to keep track of who owes what (and indeed, if everyone has been paying bills correctly and on time)?

We really need a clear, fair and economic system for paying all these bills and any further advice would be much appreciated!

G_M

By having a joint account you become linked.

If one of you goes out and gets a credit card, runs up a huge bill, fails to pay it, his credit record will reflect on all the others via the shared account.

Agree to have regular house meetings. Can be weekly, monthly - up to you, but not less frequent than monthly.

Use it to discuss grudges/annoyances (Jo never washes the dishes; Pete is noisy all night we can't sleep; Paul eats all the food...)

Use it to balance who owes who what. Check the bills are paid up to date (just because Jo has agreed to be responsible for the gas check he's actually paid it). What expenses were paid this month? Who paid how much for loo roll, washing up liquid, teabags (and other shared items). Start each month (or week) from a balanced position therwise debts between you will escalate.

When you've finished the 'business' meeting, then you can compare social calanders for the next week!

Mrs_Z

Hi, just get 1 account which is dedicated to household expenses (like a virtual kitty) and for which you both pay an agreed sum monthly each (whatever is fair in your circumstances) and then get all bills going as direct debits from this account.

t0rt0ise

All methods rely on honesty which isn't always met. It's best for one person to pay things with the others paying them by direct debit but if one stops paying then you're in trouble. Just make sure you get the home addresses of everyone first so that if they disappear you have some chance of finding them.

BitterAndTwisted

7sefton wrote: »

About the joint account issue: surely if we get a basic account there is no risk of credit histories being contaminated, because the account cannot go overdrawn?

No. You have misunderstood what it means to become financially-linked. Say one of your housemates took out a loan and defaulted. All of your credit-files would become affected if there was a joint-account with all of your names on it.

My reason for preferring a joint account is that if we are all responsible for just one bill, it must be difficult to keep track of who owes what (and indeed, if everyone has been paying bills correctly and on time)?

You don't need a PHD or A Level Maths in order to keep track of who has paid what and consequently who owes what to whom. A fairly simple Excel spreadsheet would enable you to do that

olly300

7sefton wrote: »

My reason for preferring a joint account is that if we are all responsible for just one bill, it must be difficult to keep track of who owes what (and indeed, if everyone has been paying bills correctly and on time)?

We really need a clear, fair and economic system for paying all these bills and any further advice would be much appreciated!

Lots of people on here including myself have lived in shared houses and have had busy lives.

It is really not hard for a group of intelligent people to all keep track of the one bill they have to handle and who owes them what for it.

In fact in the shared houses I lived in we ended up with a folder in the hall/living room where the bills where put in. The person responsible for that bill would then add a sheet or a note on the back of the bill with bill calculations, names and who owed what.

If you can't do this I hope none of you run small businesses in future as you would be in a real mess as while you can employ an accountant/bookkeeper ultimately it's you who has to keep an eye on the books.

orangeslimes

olly300 wrote: »

It is really not hard for a group of intelligent people to all keep track of the one bill they have to handle and who owes them what for it.
.

There are plenty of intelligent people who just like to ignore bills and money though, and just take ages to get around to sorting out things.

One of my flatmates took four months to give me £32 for one of the bills- I am pretty sure it is not because he didn't intend to give me the money - but probably everytime he went on the computer to transfer it he got sidetracked.

Another of my flatmates always took at least a month after receiving an electricity bill before sending an email round everyone asking for money - usually saying please be quick about it because my account is overdrawn.

I think having a joint account is risky - especially if you live with someone who forgets to transfer in their share, and a payment bounces.

I would probably assign different bills to each person, and choose the most organised and solvant people for the more important bills
(e.g. paying the tv licence is less important than council tax, gas/electrcity)
And maybe choose a communal area for the bills to be kept, notes of who owes who what. You do have to put a certain amount of trust in your flatmates though.

The most efficient way that bills have been sorted out when I have lived in a shared house involved one friend of mine doing everything - she is the most organised person I ever met, and also trustworthy. But maybe not the fairest way.

Having regular proper "meetings" is probably overkill - but it helps if you see each other everyso often - e.g. have dinner/go for a drink, and makes living together easier.

You also have to think how fussed you are about things like if someone always ends up buying the washing up liquid and other people don't.