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I'm in the process of getting an apartment with my girlfriend and a friend. We plan on all sharing rent and utilities but there is a large gap in earnings between the three of us, mostly that I out-earn both combined. I want to do things as fairly as possible, so I'm unsure how to split the rent, and ensuing utilities.

Due to the area where I work, the apartment is more expensive than the others would be able to afford without me, and splitting things at the 33% mark would simply leave them next to no money outside of rent, or so I fear. How should I go about this?

Edit for requested information: All of our incomes are known between each other. Me and my girlfriend are sharing a single room.

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    Fair is whatever you folks agree upon. Unless you want to install additional meters. – keshlam Aug 15 '16 at 19:34
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    It seems to me some info is missing. Why is this third person renting an apartment they cannot afford? If you want to subsidize your girlfriend even though she can't afford it, in order for you to live together, that seems plausible, but why does your friend need to live with you? Also, if paying their fair share would leave them with no money after paying rent, it sounds like the apartment is too expensive for them, period. – BrenBarn Aug 16 '16 at 3:35
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    Personal, I prefer to split it on an hours worked system. If rent is £600 per month, I earn £4 an hour and you earn £2 an hour, I will put in £400 where you put in £200, meaning we both worked the same amount of hours to earn our keep. This only really works if you both work similar hours and neither your hours nor your effective hourly rate fluctuate.. so it probably wouldn't work for many cases. There's maybe a more fair extrapolation of this that takes hours worked into account. – Trotski94 Aug 16 '16 at 12:13
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    @JamesTrotter That sounds like an absolutely disastrous idea. Firstly: too many loopholes; imagine if person C started making zero dollars an hour due to job loss, so they would live rent-free? Secondly, whether at work or outside of work, NEVER EVER discuss your earnings with anyone that is not entitled to know this information; heck, I stopped letting my parents know my earnings once I graduated college. If person C legitimately cannot afford an even split of rent/utilities then you are just supporting a charity case; which is fine and dandy if that's what you actually want to do. – MonkeyZeus Aug 16 '16 at 17:08
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The simplest way to handle this is for you to rent the apartment and sublet to the girlfriend and friend. I'd split the utilities evenly, one-third from each. The reason for this is that each of you contribute evenly to generating the utility bills. It's not like your income makes the water cost more for you.

Utilities are driven by usage. Dividing them other than equally is likely to lead to more problems than it solves. Also, it seems unlikely that a different apartment would use significantly different water, electricity, or internet. Those are driven by the appliances rather than the size or location of the apartment. Only pay more for the utilities if you want something that they don't. For example, maybe you want HBO, etc. It would be reasonable for you to pay the entire premium if that's a luxury that they simply wouldn't buy.

I'd also divide the groceries evenly if you share and share alike. If you eat separate meals, you can buy separate groceries.

If the rent can't be split evenly but you could afford it alone, then you can just sign up for it. If you break up with the girlfriend and/or the friend moves out, you're still fine. You have your fancy apartment and can afford it.

The bigger problem comes if you can't afford the apartment without both the girlfriend and friend contributing. If so, you should probably avoid this situation. It's fragile. Any person leaving would put you in a financially untenable position. You can look for a new tenant to replace your friend, but you can't exactly rely on getting a new move-in girlfriend on demand.

Neither the girlfriend nor the friend can afford to be on the main lease. In case of emergency or tragedy, they couldn't replace you as a tenant. That's why they should sublet. Then their obligation is to you, not to the landlord.

How much apartment would the girlfriend and friend get if you weren't involved? What rents would they pay? That's probably how much rent they should pay for this apartment. You want a better apartment (or a better location)? That's on you.

You should only do this if you want to do it. If you want to share apartments with the girlfriend and friend, then do so. Work out something equitable. If you plan on moving in together to reduce your costs, then you don't sound like you are compatible. Obviously there are reasons to move in with the girlfriend aside from costs. Why can't the friend get his or her own place? The added rent probably won't do more than pay for the added room (you could get a one bedroom without the friend).

That points to an alternative way of calculating the friend's contribution: the difference between a two bedroom and a one bedroom apartment. That's the additional cost of the bigger apartment. If the friend can't afford that, then this might not be a good idea.

Summary

Make sure that you can afford the apartment if one or both of the friend and girlfriend move out. You can eventually replace the friend as the tenant but don't rely on doing the same with the girlfriend. Share utilities evenly. Possibly groceries too. The friend should pay at least the added cost of the additional bedroom. Don't expect either to pay more in the new apartment than they would pay without you. You should be the only one on the main lease; sublet to them.

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    good points. not all landlords permit subletting. they'll want all occupant on the lease. – JTP - Apologise to Monica Aug 16 '16 at 0:05
  • The fifth paragraph doesn't have to be relevant. I was in the same situation and set up a contract to cover these things. I was basically their landlord and I built in a two month notice period clause and the responsibility to find a replacement tenant when leaving. – Kevin Aug 16 '16 at 9:01
  • Thanks for the answer, this seems to be a pretty fair way of doing things, Talked it over with the others and they agree. – Ranma344 Aug 16 '16 at 12:48
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    @RCarpenter Adding to this, it might also be worth having a discussion ahead of time to set ground rules about rent due dates and what happens if somebody can't pay their rent on time; even if it's clearly spelled out on the sublet agreement it's good to discuss. It's easy to let things slide for friends, but depending on your relationship with your subletters, you don't want to get into a pattern or a "give them an inch and they take a mile" type situation. Having rules ahead of time will help prevent uncomfortable situations later; living with people can put a lot of stress on a friendship. – Jason C Aug 16 '16 at 15:28
  • @Kevin I like the clause where your girlfriend is responsible for finding you a replacement. That would definitely make life much simpler. – Aron Aug 17 '16 at 9:12
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This might get closed as an "opinion" question. Tough to say up front.

You are kind to be willing to do this, and if just you and GF, it would be simple, split the costs the same as the ratios of your incomes. Say you have twice her income. You pay 2/3 of bills and she pays 1/3. In effect, you are subsidizing her, but this is often the case for working married couples, one earning more than another.

But, this will mean subsidizing the friend as well. In theory, he has 1BR, and should pay 1/2 rent, 1/3 utilities and common food, etc. If he makes 1/2 your income, and so does GF, for simple math, he'll pay 1/4 of rent and utilities. That's an emotional issue, will you be ok with that? You'll be subsidizing a friend, instead of having a stranger pull their own weight.

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    +1 | Then what happens when a roommate's pay changes? Do you adjust these ratios? If so, how frequently do you revisit income changes? Do you really want to be this involved with your friends income? Will your friend accept opening up his/her finances to you in this manner (over the long term)? – quid Aug 15 '16 at 19:32
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    @quid - agreed, to all your points. IMHO, paying 1/3 for a full bedroom is kind enough. Subsidizing a friend can get dicey. – JTP - Apologise to Monica Aug 15 '16 at 20:15
  • @Joe At least for me, the one on whom this would this would be the hardest wouldn't be the OP, but the friend. It's hard accepting charity. Lots of friendships have been damaged by such things. – Voo Aug 16 '16 at 17:44
  • One way to make the uneven split more palatable for everyone is if the couple has a better room that the other roommate. In the past I've subletted a room from a couple - they had the master bedroom with a great view and attached bath, I had the smaller bedroom with a view of a brick wall and used the bathroom out by the livingroom. They paid 3/4 of the rent, I paid 1/4 and everyone was happy. She earned much more money than him (a student), I don't know how they split rent, but I assume she paid for all or most of their share. – Johnny Aug 16 '16 at 18:55
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I don't think there's a conclusive answer to your question, but I have a real world example for you.

I was in a similar situation for almost 6 years (I was the friend, but also the one with the highest pay). I rented a house, my name on everything. I made a separate contract with both my friend and his GF and they both rented a room from me.

I looked up the total m2 of the house and divided the rent by that number. Multiplied by room sizes I knew what everyone had to pay for their personal space, I simply divided the rest by 3 to find the remainder of everyone's rent.

I don't know the numbers anymore, but here's an example:
house = 150 m2
room 1 = 10 m2
room 2 = 15 m2
room 3 = 25 m2
shared space = 100 m2
rent = 800,-

This gives 5.33 per m2
The shared space is worth 533.33 Divided by 3 is 177.77, So the total rent for each room is:
room 1 = 10*5.33 + 177.77 ≈ 231
room 2 = 15*5.33 + 177.77 ≈ 258
room 3 = 25*5.33 + 177.77 ≈ 311

We divided the rest of the costs (gas, power, water, etc...) evenly. This was fair in our case, because the rent was directly tied to the size of the rooms. The only thing we had left to do was give the poorest person the smallest room.

  • Doesn't even really have to be the "poorest" person who gets the smallest room. If, in a similar situation, one finds, say, the smallest room cramped, but the largest room larger than needed, it wouldn't be unreasonable to take the mid-sized room even if one has the highest income. Assuming, of course, that everyone is happy with it. Oh, and 10+15+25+90 = 140, not 150. – a CVn Aug 16 '16 at 8:46
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    Note, you can use the <sup></sup> code to make superscripts (and <sub> for subscripts) – Wayne Werner Aug 16 '16 at 21:54
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Realistically, fair is whatever you all mutually agree upon. Some people can do means based splits, some people can't.

My recommendation is to split things evenly, based on actual used space or usage. Do you have a 2BR with similarly sized rooms? Break it up by room, so in this case your GF and you pay 50% and the other person pays 50%.

Maybe there's a garage or one BR is bigger. I've seen splits not 50-50 based on these factors. You may consider paying a third all around for rent but I would try to avoid solutions that are not usage based.

If you don't and try for a "means" based split, best case scenario is nothing really is different.

But the worst case scenario is setting yourself up to be taken advantage of - because you are effectively subsidizing other people, this often changes relationships. Not always, but often.

Frankly, the best option here is to find a place that is more affordable for everyone. Trying to make it so that your GF and roommate are not going to be in a difficult financial place by living with you, it resolves all the problems here.

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Another option is to look at the rent difference between where you need to be and where the others would rent, without considering your job. You pay the difference, which is due to your unique requirements, and split the remainder equally.

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Myself and my partner do things a little differently to most. We split accommodation and utilities payments by net income proportion to ensure that we both have the same amount of spending money.

For example;

  • if we both earn $40,000pa we both pay 50% of the bills
  • if she earns $50,000pa and I earn $25,000 she pays ~66% of the bill

The really important bit is net income. We take off a whole bunch of payments, e.g;

  • Pension contributions
  • Student loan
  • Employer subsidised healthcare

Our contributions go into a joint account and the rest is our money to spend. The upshot is that we both get to enjoy the same minimum quality of life because we both get the same amount to spend at the bar.

  • So effectively, you equalize the number that is the net pay reduced by a specified set of expenses? – a CVn Aug 16 '16 at 8:48
  • @MichaelKjörling that's a concise way of putting it. Most 'expenses' are actually reduced for us by UK PAYE tax. This includes the student loan, which is handy. Originally we did not include the loan but it is significant enough to be a burden on her quality of life. I am happy to pay extra and I know the favour would be returned. – Gusdor Aug 16 '16 at 9:00
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If you or they feel uneasy about you simply paying more rent than them for equal usage, you can work out an agreement where they "pay" in other ways. For example, I once lived with someone that made about double what I did, and so he paid more rent than I did. In exchange, I was responsible for cleaning the kitchen. If your roommates hate cleaning then you could substitute something like running errands, cooking, or looking after plants/landscaping. If they have some specialized skills then they might be able to provide those instead (car maintenance, financial management, etc.).

Of course you'll want to agree ahead of time on what the conditions of satisfaction for the task are, such as how often the kitchen will have to be cleaned and what the definition of "clean" is. You also can't be a jerk and make their job extra hard, such as by completely trashing the kitchen every night.

Obviously it will depend on the temperament of your roommates whether or not they'll be happy with this or feel insulted being "the help". It worked for us because it was a task he hated and one I didn't mind, and it kept me from feeling like I was mooching off him. I would feel them out when you propose a possible rent and utilities split. If they feel like it's an unfair burden on you, but they can't afford more, then you could suggest this as a way for everyone to contribute equally.

Whatever you decide to do, don't hold it over their heads that you pay more. Agree on something that everyone feels is fair, whatever that is. If you want a concession due to paying more (such as you get the garage, get to pick the art on the walls, whatever), then agree to that up front. Then accept that you've made a fair deal and they don't owe you anything beyond what you've all agreed to. It's awful to feel like you live in someone else's home and that you are getting into ever deeper debt with a close friend or significant other, and it will breed resentment. If you can't do that, then don't share an apartment with them at all.

Summary

The most important thing is that everyone feels it's fair, regardless of the numbers. If you cannot get to that agreement through dollars alone, you can have them contribute to the home in other ways, such as cleaning, cooking, or performing maintenance. Just make sure that everyone truly does feel it's fair and that you are all equals.

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Does your apartment have several bedrooms that are all different in size? If yes, then everyone can pay by square footage. However, if you share the room with your girlfriend, it won’t work. Even if your live in a master bedroom with her, you friend will probably pay more than your girlfriend.

I heard there are websites that let each roommate bid the max they’re willing to pay for each room in the apartment. You can try one of these service.

Or you can simply divide the rent between three of you, but utilities will be covered only by you.

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