How to divide the rent fairly

A “fair” agreement is not always strictly equal.

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Key points

• It doesn’t matter which method you use to split the rent, as long as all parties involved agree that it’s fair.
• The percentage paid by each tenant could be split evenly, per square foot, by income, or even otherwise, based on who does what in the house.
• Whatever you agree to, put it in writing to help avoid misunderstandings later.

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Housing costs continue to rise. In theory, having a roommate to share the costs is the best way to combat rising prices. But, as with most things, there’s the theory, and then there’s the reality.

What seems like a simple solution to manage your personal finance it can be much more complex when it comes to putting it into practice. Even something as fundamental as dividing the rent fairly can cause a lot of complications.

Perhaps the most important thing to keep in mind is that everyone has their own idea of ​​what is “fair.” The goal is to find an arrangement that everyone can (literally) live with. There are a few ways you might interpret a fair financial split based on your roles and relationship.

Option 1: Even Division

By the most basic definition of a fair split, each would pay the same percentage of the rent (and utility bills). So if the rent is $1500 a month, two people would pay $750 each or three people would pay $500 each.

This method has the benefit of simplicity, but it works best when all rooms are roughly the same size and have the same amenities. The difference between equality and equity cannot be overlooked.

What does that mean? Let’s say the house you’re renting with two friends has three bedrooms: a master bedroom with a private bathroom and two full-size bedrooms. In a fair split, everyone pays the same amount, but is that really just people who pay the same amount for less space? Probably not.

One way to divide the rent in a house or apartment with unequally sized rooms is to divide the rent in the same way that square footage of living space is divided. This way, everyone pays for their own space in a more literal sense.

Since everyone will be using the public spaces, you can ignore them. This simplifies the math: add up the total square footage of the bedrooms (and any other private space). Then divide each housemate’s private square footage by the total amount.

For example, imagine that two people will rent a two-bedroom apartment with a shared bathroom. One room is 350 square feet and the other is 250 square feet, for a total of 600 square feet of private space. Based on the size of the rooms, they would split the rent 58% and 42%, respectively.

Option 3: Income Adjustments

In some cases, the fairest way to split rent is based on your means, not fixed amounts. Basically, everyone pays the same percentage of their income for rent. (This option is more common for romantic partners and engaged couples than the typical housemate situation, but it could apply to anyone.)

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As an example, let’s say the rent is $1500 per month. Person A makes $40,000 a year and person B makes $80,000 a year. Person B earns twice as much as Person A, so they would pay two-thirds of the rent, $1,000, while Person A pays one-third, or $500. Person B can pay a higher dollar amount, but both people pay 15% of their income.

Option 4: Balanced by responsibility

When considering how to divide the rent, you also need to think about how you’ll divide the responsibilities, and the two areas may overlap for some people. It all comes down to how each of you values ​​your time (and how much you value not having to do certain tasks).

Do you or your housemate love to cook? Is it worth a little extra money each month to not do you have to cook? If one housemate takes on additional responsibilities, it may make sense for the other person (or persons) to pay a little more rent to compensate for her time and effort.

These situations can get complicated quickly, so make sure everyone’s expectations are clear from the start. It may even be helpful to have a written document outlining the duties and expenses, and showing everyone’s agreement to fulfill them.

Option 5: mix and match

Each person’s life situation will be unique to the people who inhabit it. What works for one set of housemates may not work for the next. The nature of your relationship, your finances, the house, all of this and more can affect how you decide to split your rent and other expenses.

Be open and honest with your potential housemates about what you feel is fair and just. If you can’t come to an agreement on this, there’s a good chance you won’t be a good fit as housemates anyway.