Splitting Bills with Housemates

Setting the Ground Rules

The golden rule of shared living is communication. Before you sign a contract or even move your boxes in, sit down with your future housemates and agree on how finances will be handled. It might feel awkward to discuss money so early, but it is much better than arguing over a cold radiator three months later.

You generally have two main options for setting up your household bills:

• The DIY Approach: You and your housemates sign up for each utility provider directly. You are responsible for managing the accounts, submitting meter readings, and paying the suppliers. This is usually the cheapest option as you avoid administration fees.
• Bill Splitting Services: Several companies specifically target students and graduates. They bundle your gas, electricity, water, and internet into one monthly payment per person. While convenient, this service comes at a premium price.

For the purpose of this guide, we will focus on the DIY approach, as it saves you the most money and gives you greater control over your outgoings.

The Essential Bills Checklist

When you move into a new property, you need to set up the following accounts immediately. Here is what you need to know for each one.

Council Tax: The Graduate Trap

This is where things can get complicated. If everyone in the house is a full-time student, the household is essentially exempt from Council Tax.

However, if you are a mixed household (for example, three students and one recent graduate working full-time), the property loses its full exemption. The non-students are liable for the bill, though they may qualify for a 25% single-person discount if they are the only non-student.

How to Manage the Payments

Once the bills are set up, you need a system to pay them. Relying on a “whoever sees the bill first pays it” system is a recipe for disaster.

1. The Designated Paperwork Person

Nominate one organized person to have the direct debits come out of their account. This person pays the utility companies, and everyone else pays them back. If you choose this method, ensure the bill payer is trustworthy and organised.

2. The Joint House Account

You can open a joint bank account specifically for bills. Everyone sets up a standing order to transfer a fixed amount (e.g., £150) into this account on the day their loan or salary arrives. All bills are paid automatically from this pot. At the end of the tenancy, you split whatever is left over.

Modern banks like Monzo or Starling are excellent for this as they offer “pots” or shared tabs that allow you to see exactly who has paid what without needing a formal joint account.

3. Use an App

For tracking expenses without opening new bank accounts, apps are essential. Splitwise is the industry standard here. You simply log a cost (e.g., “Sarah paid £40 for Internet”), and the app calculates exactly who owes who, simplifying the math at the end of the month.

Download Splitwise here

When Things Go Wrong

Despite your best efforts, disputes can happen. Perhaps someone is using the heating 24/7 while everyone else is freezing to save money, or a housemate is consistently late with their transfer.

If a housemate refuses to pay, remember that if your names are jointly on the utility contract, you are all “jointly and severally liable.” This means the utility company can chase any one of you for the full debt, not just your specific share. This is why we recommend keeping open channels of communication and using apps that provide a clear paper trail of debt.

Summary

Splitting bills does not need to be a nightmare. The secret is setting up direct debits immediately, agreeing on a payment method before you move in, and using technology to keep track of the numbers. Once the admin is sorted, you can get back to enjoying your independence.