How to transition from a share house to your own rental

When first venturing into the world of independent living, there are a few different options. Which one we choose is mostly determined by our financial situation.

Having lived with mum and dad for long enough, some will go straight into home-ownership after saving enough for a deposit.

For many people, the first foray into living outside the family home is share housing or room accommodation.

“As the name suggests, a share house is the term used for where two or more people are named as co-tenants on a tenancy agreement for an apartment, unit or a house,” says REIQ CEO Antonia Mercorella.

“Co-tenants are jointly and severally responsible for meeting the obligations under the general tenancy agreement.”

Rooming accommodation agreements allow residents to stay in rooming accommodation such as boarding houses, supported accommodation services, off-campus student accommodation, and other rooming-style accommodation.

Eventually though, the time will come when you’ll want to move from sharing to renting your own place.

But before you do, it’s important to know the difference when it comes to your legal and financial responsibilities.

“Share house means that you are sharing everything,” says PRD chief economist, Diaswati Mardiasmo. “Housing space, kitchen, living areas, potentially bathroom, any outdoor space, weekly rent, bills, and any other items related to the house or property.

“You also share any legalities – both in terms of rights and responsibilities – being part of the rental lease agreement. More often than not, the landlord will look at the rental lease agreement as one entity, therefore it is all leaseholders’ responsibility to uphold the agreement and maintain the property.”

Renting your own property, on the other hand, comes with more freedom but also more responsibility, Dr Mardiasmo says. “You are in full control of everything within the house or property, however you also shoulder the legalities and responsibilities by yourself.”

What are the benefits of share housing?

There are many reasons why someone might choose to share a house, the most common being financial.

“Sharing a rental property can greatly reduce costs, from a weekly rent and bills perspective,” says Dr Mardiasmo.

Other reasons include companionship and location.

“Potentially, there are fewer rental properties available in particular hot areas, for example near a university or transport or CBD area, thus the most viable option is to share house.”

In Queensland, a range of legal agreements covers share accommodation, says Ms Mercorella, and knowing which one should apply to your own situation is essential for understanding what your relevant rights and obligations are.

“In a co-tenancy situation, all co-tenants are responsible for meeting the obligations and jointly liable,” she says.

“In Queensland, the Residential Tenancies and Rooming Accomodation Act 2008 states what must be included in every agreement for rooming accommodation and general tenancies covered by the act.

“Each type of agreement sets out the rights and obligations of each party.”

As a rule, key obligations include paying rent and ensuring the property or room is properly maintained.

Why switch from a share house to your own rental?

There are multiple reasons why you might say “enough is enough” when it comes to share housing.

You might have had a pay rise, allowing you to rent a place on your own, or a new relationship might mean it’s time for some increased privacy. Maybe you’re just ready to have your own space and take control of the TV remote.

For those thinking ahead, renting your own property will enable to you to prove your financial readiness and serviceability for a home mortgage.

But along with more space and a bathroom to yourself, renting your own place means taking over the responsibilities.

“Obligations when you are the tenant, renting on your own, is similar to when you share a house. The only difference is that all of the obligations now fall solely on you,” says Dr Mardiasmo.

“More often than not, those who are considering renting their own place are attracted to the independence.  However, once they do, it can become a shock that now everything falls solely on their own shoulders.

“Not only from a financial perspective of paying rent on time, but from suddenly being responsible for all bills, [and] ensuring they are paid on time.”

What to consider before making the switch

As well as rent, you’ll need to consider any additional bills that may have been previously covered in your weekly payment, as well as previously shared bills, and determine whether you’ll be able to pay them alone.

“There could also be other costs such as cleaning, property damage, among others, that you need to pay by yourself,” says Dr Mardiasmo.

“You also have to manage all legal obligations yourself – for example, dealing with your property manager and/or any disputes.”

Another aspect you might consider is your social needs.

“Some people may like the idea of independence, while others, once experiencing total aloneness in their own rental property, can miss the companionship, especially in lockdown situations.

“That said, renting your own place is a good way to start building up your rental history and income serviceability, if you are thinking of buying a house down the track.”

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