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Home share to beat the budget blues

8 July 2022
3 minute read
Young adults sitting on a couch laughing

It’s no secret that household budgets are under strain. Rising food prices, increased transport costs and higher interest rates are all playing a role in this. Many people try to improve their financial situation by either having a family member or friend share their home, or moving in with family or friends – reducing the costs of rent or bond repayments and freeing up the cash for other expenses.

This is a great approach to cost saving, but – as with any financial decision – make sure you understand the pitfalls and hidden costs, so that you achieve all you set out to.

Before you move in

Whether you are considering having friends or family move in with you, or moving in with family or friends, work out the finances first!

Agree upfront on what costs will be shared and how, and when payment is due. For example, a friend or family member moving in with you would agree in writing to pay R3 000 towards your home loan on the 25th of the month into your bank account.

Then, both parties should draw up a budget to make sure the numbers make sense and can give you the savings you need!

Save by sharing these costs

Both parties will be able to save on housing costs, which can make up around  ! Saving on this one item can add thousands back into your bank account.

In addition to bond or rent costs, having one property will mean you can also save on:

  • Utilities such as rates and taxes
  • Security and gardening costs
  • Maintenance
  • Electricity
  • Levies, if you live in a complex

Important considerations

Electricity and water
You might have calculated the rent you get from your houseguest as a portion of your monthly rental or home loan repayment. But be sure to work out the costs of shared expenses, like electricity and water, bearing in mind that these will increase with more people living under your roof. Be especially careful if the rent is inclusive of all utilities because you could find yourself funding someone else’s extensive usage.

Plan for change
Review your sharing agreement regularly and be open to changes as circumstances change. And, make sure your agreements can be adapted to situations when costs increase or one party has much higher bills than another! For example, a family with teenage boys may consume a lot more food than another family – making sharing food costs 50/50 unfair.

Top tip: Agree on how a “move-out” will work, including agreeing on a notice period, and which costs will be covered by whom. Make a special note of how to split any shared items.

You will also need to consider other expenses and financial factors depending on whether you have family and friends move in with you, or you move in with them.

If you have friends or family moving in with you, you should:

  • Agree how you will split incidental costs such as repairs to appliances or furniture, or the cost of new appliances or furniture
  • Consider other costs to share, such as transport costs, child care costs, and potentially food costs (buying in bulk can save money)
  • Ensure you declare income you receive towards the home loan or rent as an additional source of income on your tax return. Your financial adviser or tax consultant can assist with this

If you are moving in with friends and family pay careful attention to:

  • Transport costs – these may increase if you move far away from home and school
  • New school fees – a move far away may mean a new school for your children, and potentially higher school fees
  • Storage costs for some furniture and appliances – alternatively you may be able to raise funds by selling surplus furniture and appliances such as a couch or fridge
  • Additional income you may receive if your rent or sell the property you used to live in – declare this as required on your tax return, or chat to a financial adviser about investing any additional funds

Set some ground rules and make the move!

When you have the budget items sorted, consider drawing up a few house rules, such as how spaces are shared, how meals work (who prepares, cleans and at what times), general and room cleaning, parties and noise! And then you’re ready to set a moving date and start saving!

Embrace the new way of living

Sharing space can be a shock to the system with another person – or even people – in one space! However, if you view it as an adventure, it can be a great experience for you and your family. Easing the pressure on your budget will certainly be a win, which makes it worth dealing with some of the drawbacks of sharing a home.

From the 2021 payprop annual report- tenants spent 29% if income on rent

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