How much rent?

[NancyMulligan]

I'm looking for opinions on how much rent to charge/expect to pay in the following situation.

A family member is thinking of renting out some rooms in their house to another family member. I'm trying to help them decide on a fair deal for both of them so would appreciate your thoughts.

The people renting would be 2 adults renting a small double bedroom. They would also have a second bedroom of a similar size for their adult offspring to use to keep their belongings in and to sleep in as and when required, plus sole use of a further small home office/bedroom to use as a private living room. Shared kitchen, bathrooms, etc. Most bills included, except food.

What do you think would be a fair rent to pay and what would be your reasoning for it?

Depends whereabouts in the country you live.

It's a large town in the South West.

Depends on how many other people live in the house, how big it is, average rent costs for the area, why exactly they're living there etc.

Big difference between a couple of high earners moving into a 3 bed semi in London with the homeowner an average earning sibling/ friend, when you'd expect them to pay closer to 2/3 of the bills and the local going rent for a similar house share

And eg well off parents with a large paid for home elsewhere and other dc letting their cash strapped adult dc and partner move in. When a smaller % towards the bills would be appropriate

Name change fail!

It's a large town in the South West.

3 rooms not available for use at all to the owner? Wow that is a lot of rooms. Without knowing the size of the house it is hard to say re utilities but I would say at least £750 a month and that would be a bargain.

The market rate would be around £350/400 per month per room, so £700-800. But this is family.

£400 came to my mind.

I'm trying not to give too many details as the situation is quite sensitive.

Renting family members both in FT work earning somewhere between £30K-£40K each. One managing but not very well-off retired family member there currently.

If they are earning that kind of money then they should be covering all bills and then throwing some money to the relative. It would still be cheaper than rent plus bills for them. So ask the relative what the bills are and pay in full in lieu of any rent as such.

BadTimesAtTheElRoyale

The house is a semi, extended many years ago to have 5 bedrooms.

They will have sole use of THREE rooms? And both earning good money? £100 PW for each room would be £1200 pm (ish). Not excessive. Then decide how much discount you'd want to give them as family members.

As a starting point, I would look at the average price of a 3 and 1 bed in that area.
Unless a huge amount, deduct the cost of the 1 bed from the 3 bed, and each pay a third of that.
Or pay a third each of the current rent/mortgage.
Although if I was the couple I would offer to pay more as we would take up more space.
All utilities get split into thirds.

You say most bills included...just think how much heating is going to be needed during the winter - plus washing machine, tumble dryer, showers, cooking etc.

Thank you so far for the wildly differing figures!

It's certainly giving me food for thought. I need to persuade the home owner not to settle for too little as they're retired and really ought not to be strapped for cash in this situation.

Nancy is the house now owned outright or still on a mortgage ? If owned outright I would say they take over all bills as a gesture of thanks. They can save the money that would be going on rent as a deposit. The relative is doing a huge favour.

Even if they take over all the bills they have to pay something.
The house still needs money spending on wear and tear and the owner will end up out of pocket.

@BadTimesAtTheElRoyale there's nothing to suggest that they are moving in to save up for a deposit.

I think you need to look at costs of rentals in the area. It's too tricky to estimate how much they should pay without knowing all the details.

£700-£800

£1200 would absolutely be excessive- you could rent a house for that anywhere outside of Bristol/Bath.

The family member should bear in mind the more they charge, the harder it will be for the couple to save, so the more likely they are to stay longer!

£650 a month would get you a one bed flat in my large sw town (which isn't a cheap one)- but you pay a premium for privacy. So I would say that would be fair + their share of any bills on top (up to the relative if they go 50:50 on these or split 3 ways and the lodgers pay 2/3).

Thank you everyone.

Firstly, from conversations I don't think the couple are saving anything and I don't think they have any plans to buy a house. They are late 40s/early 50s with grown up children.

Double rooms in shared houses in our area seem to be anything between £350 - £480 but are generally more modern than what's on offer here.

The house is owned outright. You're right about the wear and tear which needs to be taken into account. The owner is keen to have company which might suggest a lower price would be reasonable but I'm concerned that they don't find themselves under pressure financially as a result.

I'm thinking £400-£450 might be reasonable.

For 3 rooms I would think they need to pay more than that.

Utility bills will increase massively. 2/3 extra adults taking showers, washing clothes, cooking food, using appliances and devices. Water, electric and gas consumption will all go up.

They will lose the single person council tax reduction too.

3 double rooms @ £350 pm each = £1050. Say a deduction of £300? That's £750 pm.

It’s a very good point about the bills. I now think £600 and they pay their proportion of the bills - eg if there’s three of them and one homeowner, they pay 75%. That means everything - internet etc as well. They should end up paying about £900, which is still v cheap and they’re dominating the house.