How Much Rent to Charge to a family Member

LJeev1 on 15/01/2020 - 15:23

Hi All,

My brother came to Australia 2 weeks ago for getting his graduation. And he would be staying with us for next 2 years. Currently he is looking for part time jobs. Since the Australian education condition only allows him to work part time and also he needs to put some money for his upcoming fees from what he earns.

From my side I am trying to support him by providing him place to stay at my home which include food, internet, etc.

My Question:
Considering the above condition, what would be a possible rent i should charge, don't want to charge him market rate. What would be a basic charge for family members. Please don't say zero charge.

Financial

Comments

  • Skramit on 15/01/2020 - 15:27
    +3

    How many people will be living in your house? Usually some sort of calculation on water/elec/gas/cleaning/food costs is handy for calculating board. E.G. If there are 3 adults, then 33% of these bills.

    Or just keep it simple and ballpark a random figure of say $50 a week.

    • Jeev1 on 15/01/2020 - 15:52

      Thanks for the advice.

    • dizzle on 15/01/2020 - 18:48

      Agree with above about splitting costs. However you may feel that they don't need to be split evenly depending on how much you want to help out.

      For example I would assume that a third adult probably would increase the food bill to 150%, so a third of the food cost makes sense. However adding a third person likely wouldn't add the same amount to the electricity or gas bill (unless excessive usage)

      So I would figure out the expected living costs (probably wouldn't count actual rent/mortgage payments) divide by a third and then look at a reasonable amount near/under that. Compare it to what you think he can spare and still enjoy the student life.

      If you find he's enjoying student life too much, then increase it :)

  • orangetrain on 15/01/2020 - 15:36
    +13

    Charge somewhere between zero and market rate then. Why are you asking us?

    • Skramit on 15/01/2020 - 15:37
      +8

      So that when his brother says "WTF!" he can send his bro to OzB who told him how much ;)

  • HighAndDry on 15/01/2020 - 15:42
    +8

    $900pw. I charge a 5% commission for giving this quote.

  • GG57 on 15/01/2020 - 15:44
    +1

    We don't even know which location OP is in.

  • rompastompa on 15/01/2020 - 15:46
    +4

    It depends on your situation. Do yourself a budget of house costs, then you'd know how much you'd spend on electricity, food etc. Take off rates etc which you'd already be paying. Electricity and water won't be that much extra, but food will (that is if food is included). Also if you need to upgrade your internet plan, add that in (eg. 200GB to 500GB)

    Go $100pw + 1/3rd of food bill + one night of him cooking/cleaning.

    1) Make sure you let him know if he can contribute more, then please do (assuming you have a mortgage?)
    2) The one night cooking/cleaning can be him buying dinner.
    3) price subject to change if you find that he's running a reverse cycle aircon 24hrs/day @ 19c

    • Jeev1 on 15/01/2020 - 15:51

      This will Help.

      • rompastompa on 15/01/2020 - 15:54
        +4

        4) Make sure you're 100% transparent with costs. Otherwise there might be a negative situation where you want to charge more, and he thinks you're just getting money off him.

        You don't have to go into things like how much you owe on mortgage, but a flat 'these bills have gone up $x, which is more than we anticipated, we'll cover you for this quarter, but either a) contribute more, b) pay more, c) curb your uses of X (eg, aircon).

        Make sure you're flexible with the rent. If he's not got any money as he needs to buy a uniform, car, fired/contract not renewed, etc, that rent might not come in. Don't expect rent, and it'll be easier if things go south.

        At the same time, if you let him get away with not paying rent for a few months, you might find that no rent ever eventuates. Both you and him need to understand that it can create a toxic relationship. Communication is key!

        • HighAndDry on 15/01/2020 - 16:24
          +2

          This is why I'd actually argue against this method - you start telling someone the reasons for however much you charge them, they'll start finding issues with those reasons.

          You give them just a straight up number, there's not as much potential for disputes and drama.

    • macrocephalic on 15/01/2020 - 16:39

      Agreed. Just work out how much it would cost you to have him there, and then add a figure on top for the inconenience of having him there (this part is up to you to decide depends on how much you like your brother).

  • saintpotter on 15/01/2020 - 15:55
    +5

    He's your brother…

    • Jeev1 on 15/01/2020 - 15:57

      Wont be charging that much. But Sydney cost you a lot, especially when you have mortgage.

      • saintpotter on 15/01/2020 - 15:59
        +1

        Fair enough. Well because he's your brother, you need to make sure he's not in financial distress either. How much does he earn a week? Just get him to buy all the groceries for the house weekly and contribute to cooking / cleaning etc.

        • [Deactivated] on 22/01/2020 - 19:45

          How much does he earn a week?

          Zero. Doesn't have a job yet.

      • [Deactivated] on 22/01/2020 - 19:57

        But Sydney cost you a lot, especially when you have mortgage.

        What would you have done if he wasn't moving in with you? Would you have found a renter?

    • ykwon10 on 15/01/2020 - 15:58
      +10

      But not his dependent?? We are talking about a full grown man here. Why should OP take on more financial burden for his brother? If its 2 months, maybe that's fair enough. This is 2 years mate!

  • SnoozeAndLose on 15/01/2020 - 16:02
    +2

    If it is for me, I would first ask him to do some house/Gardening/cleaning/cooking work around the house until he get a job( max 2 months)

    Then open up the cost for Mortage/food/internet etc.

    Tell him your plan and ask what does he think is reasonable and both agreed on the cost.

    Really hope this won't break the family relationship between you two.

  • CheapskateQueen on 15/01/2020 - 16:06
    +2

    yeh he would contribute to food once he starts working, definitely help out a lot with chores, pay his own petrol if he uses your car, and a token amount, like $30-50 for his extra water, electricity usage etc

  • Donaldhump on 15/01/2020 - 16:09
    +3

    charge him enough to cover costs, don't profit from him. ask him to pay for his keep by doing extra chores etc

    one day he may be looking after you in old age, a rich doctor, or just consider he is family..

  • [Deactivated] on 15/01/2020 - 16:11
    +10

    The Rocks - $1,000pw.

    My Druitt - $50. You pay him.

  • GangGang on 15/01/2020 - 16:11

    Another approach that you could get him to do are chores. Instead of getting paid money. Get him to clean the house, do the laundry or even take the dog for walks if you have one. This depends on how much you're expecting from him. If it's $50 - $100,set chores may be worthwhile. If it's more, I reckon he will think twice about staying with you.

    You should speak to him about this asap. Otherwise the next post by you will be, "brother living in my house but not doing anything"

    • [Deactivated] on 15/01/2020 - 16:56

      That creates a power imbalance. Doesn't sit well within progressive families.

  • DarthAntz on 15/01/2020 - 16:13
    +1

    Do the maths for how much rent (living expenses) you are paying for house and bills. Share that amount with your brother, and ask him how much he should pay. As SnoozeAndLose mentions above, cost in the housework and duties he can do with his time there to offset that amount. Strong communication should be a part of your terms for staying with you in these circumstances.

    Food shouldnt be included in rent. Sure you will share family meals, but encourage him to feed himself.

    And always encourage them to get more work/better work. Best case scenario is your brother is using your place for sleep, storage and a shower, and is spending the rest of the time productively working or studying.

  • Porker on 15/01/2020 - 16:17
    +2

    What's your relationship like with your brother? Good enough to ask for money or will the money cause an issue?

    I have some family members that would cause a fuss even for paying back money they owed me, while others would be willing to pay for everything and then some just for inconvenience. Then there's the members that you just pay for no matter what and it comes back around in due course. Eg. you pay for this meal, I pay for the next

    I might be over-reaching, but I feel OZB might be able to assist with you ballparking a figure, but you gotta make the decision to charge or not based on your relationship, not the the justifications provided in this forum.

  • dogboy on 15/01/2020 - 16:21
    -1

    My only tip would be to exclude food from this. It will cause a lot of issues guaranteed. Make him responsible for paying for his own food.

  • netjock on 15/01/2020 - 16:33

    Just be honest what the market rate is. Then give me a 10% discount. Figure out what he can genuinely afford to pay. Then just put the rest on an account.

    If he gets a good job and doesn't pay it back then you know he is a real prick but then it is also an amount you can afford to lose.

  • Archi on 15/01/2020 - 16:43

    brother - hey bro charge me rent I don't want to free load
    OP - ok, i'll charge you $1 because you are my brother
    OP's wife - hell no that's not enough
    op's parents - i'm going to disown you

    jokes aside, charge him nothing and if he is a good brother/person he will give you what he thinks is appropriate. it will be up to you as a brother whether to accept it or not.

  • lunchbox99 on 15/01/2020 - 16:45
    +3

    Ask your brother to pay with personal favours on a preset price list:

    Hug $5
    Cuddle $10
    Spooning $15
    .
    .
    .
    Rusty Trombone $200
    etc

    Everybody wins!

    • Archi on 15/01/2020 - 16:58

      if the OP lets his brother free load, OP's wife might be charging the OP those fees.

    • armdrags on 15/01/2020 - 16:59
      +1

      Don't forget about the dirty sanchez, rainbow shower and cincinnati bowtie

  • Taro Milk Tea on 15/01/2020 - 16:46
    +1

    The funny thing is, your brother doesn't even initiate this conversation first? What kind of brother is that? lol…jokes, but if I was to stay in my family's place (Especially in your situation), I would definitely raise the topic of helping paying the rent at least.

    • Archi on 15/01/2020 - 16:56

      My brother came to Australia 2 weeks ago for getting his graduation. And he would be staying with us for next 2 years

      sounds like the brother is in the country but not yet staying with OP.

      gotta give the guy a chance to stay there first before offering to pay or contribute to the house

      • HighAndDry on 15/01/2020 - 17:48
        +2

        Not really, I'd offer to pay before I arrive.

        • try2bhelpful on 15/01/2020 - 18:19
          +2

          Me too, but we are, most probably, from a different background. When I was at Uni, and starting out, it would’ve been odd to move in with my siblings at all, let alone for 2 years. That said if my siblings needed a place to stay I would take them in, it is just a pretty unlikely scenario.

  • profar on 15/01/2020 - 16:53
    +2

    If he is currently looking for part time work why would you charge him whatever if the poor lad has for example no savings .

    Show some brotherly love Bud . Let him at least get on his feet .

    • [Deactivated] on 16/01/2020 - 10:31
      -3

      Asian family usually all about them $$

  • garetz on 15/01/2020 - 16:53
    +1

    For family i would charge 0 rent, as long as they pay for their share of the bills and pay for all of their costs like food.

  • try2bhelpful on 15/01/2020 - 17:05
    +1

    A lot of it comes down to what he can afford and what non payments he contributes. You don’t want to rip him off but you don’t want him to be a parasite. I agree with others that food needs to be considered extra but a lot of it comes down to what are the extra costs and how much of an inconvenience he is. If he takes on doing a lot of chores, because he isn’t working, less rent. If he is a damn nuisance more rent.

    A big part of this is do you have a significant other, and if you do, have you investigated their views on the next 2 years. For the sake of your partnership you might want to consider helping your brother to set himself up then easing him out the door.

  • moto on 15/01/2020 - 17:22

    Pitch up a tent in the backyard and allow to use house facilities like laundry, kitchen, bathroom etc.

    • kiitos on 16/01/2020 - 16:02

      And forage in the garden for food.

  • ihbh on 15/01/2020 - 18:39

    You have to also consider in if you'll increase the rent if he brings a chick/bloke home (briefly, long term).

  • Ryanek on 15/01/2020 - 18:40
    +1

    For a brother? What ever he can afford.

  • crentist on 15/01/2020 - 19:20

    let him stay free, then when he finishes studying he can get a job and his own place and you can go live with him for two years

  • capslock on 15/01/2020 - 19:39
    +1

    It depends on you and your family's values and culture and how you were raised. Personally I would charge zero but there will obviously be people who have no problems charging market rate.

  • wordplay on 15/01/2020 - 20:04
    +1

    has to be percentage of his earnings, but not so much to deter him from working.
    I think ~4% of his take home pay will be ok.

  • Gelato on 15/01/2020 - 21:20

    Does he know you’re about to charge him? If yes you guys can work our the figures together

    If not, then it’s another story….

  • backpaqer on 16/01/2020 - 08:22

    A good brother would offer to pay/contribute towards board either by $$$ or helping around the house.

  • OzHunterNSW on 16/01/2020 - 09:45

    You charge exactly as you would any other tenant… don't go stupid….

  • Candour on 16/01/2020 - 13:51

    charge whatever you think based on other advice earlier. give him a long term loan to pay it off. with interest at say 6%. then when he is on his feet he can pay you back. life is uncertain. or charge him 0- market rent. up to you.
    or user pays.

  • ozbjunkie on 16/01/2020 - 14:52
    +1

    Go over his budget with him. Start with a figure of $100 bucks a week.

    Determine what true market would be before you do this.

    If $100 seems too much for him to afford after school costs then revise downward, with the knowledge you are doing him a big favour.

    If he is easily able to pay $100 and this is much less than market rates, revise upwards.

  • nurbsenvi on 16/01/2020 - 17:29

    Don't do it.

  • Darius777 on 16/01/2020 - 18:20

    1) How much does he earn per week?
    2) What are weekly expenses for running the household?
    3) How many adults in the household including him?
    4) What are rents in your area running at?
    5) Compromise. Australian rents are way too high, and he's your blood relative.
    6) Negotiate chores that become his obligation for reducing his rent.
    7) Get the agreement in writing.
    8) Stick to the agreement.

  • blawler05 on 17/01/2020 - 08:59

    ALso there may be tax implications to this depending on how you frame it. I would speak to a tax expert. Changing rent as you have called it is considered an income and would need to be reported on your income statements to the ATO.

    • trapper on 22/01/2020 - 13:19
      +1

      With a family member living with you it is pretty straight forward - no tax implications.

      • blawler05 on 23/01/2020 - 10:58

        It is not as straight forward as that. It depends on how much is charged. If you receive commercial rent (as per what the ATO considers commercial) then it is considered a rental income. Hence why he will need to speak to a tax expert, to determine what would be considered commercial rent vs a domestic arrangement. This is not something that can be answered on OZBargain forum.

        • trapper on 23/01/2020 - 11:22

          No he does not need to speak to a tax expert. 'commercial rent' - that is ridiculous. lol

          • blawler05 on 23/01/2020 - 11:33

            @trapper: That is his risk to take sure. It doesnt change the law, I have offered my point of view and he is welcome to take it or not. If you wont trust me, maybe you will trust the ATO

            https://community.ato.gov.au/t5/Investment-property/Rent-or-…

            It is not ridiculous. It is a fact. It is a grey area, hence the advice to speak to a professional.

            • blawler05 on 23/01/2020 - 11:37

              @blawler05: Here is where it goes into more detail

              https://www.ato.gov.au/law/view/document?docid=ITR/IT2167/NA…

            • trapper on 23/01/2020 - 11:38
              -1

              @blawler05:

              Payment by family members of an amount for "board and lodging"

              _17. Arrangements of this nature, whether the payment is said to be for board only or for lodging only or for both, are considered to be in the nature of domestic arrangements not giving rise to the derivation of assessable income by the recipient of the payments. It follows that the question of income tax deductions for losses and outgoings does not arise.

              • blawler05 on 23/01/2020 - 11:41
                -1

                @trapper:

                1. Where property is let to relatives the essential question for decision is whether the arrangements are consistent with normal commercial practices in this area. If they are, the owner of the property would be treated no differently for income tax purpose from any other owner in a comparable arms length situation.

                Rent is not Board and Lodging.

                If $100pw as you suggested is Normal practice for his area, then it will be considered a commercial practice.

                As I said it needs professional advice. You do not know which arrangement the tax department will see this as.

  • jj212 on 17/01/2020 - 10:19

    $100 Rent but minimum $150 if including food. Be strict with boundaries/responsibilities (cleaning/cooking etc). The alternative if they don't like it is pay double and find their own place.

  • trapper on 22/01/2020 - 13:11

    How old is he, how old are you?

    I would prob go for ~$100pw to cover increased food/water/power costs etc

    Also he should help out around the house, might be good to have a roster for this so he knows exactly what is expected.

    • Jeev1 on 22/01/2020 - 13:14

      I am, 30 and my brother is 23. already quoted him $100 for living and including food.

      • trapper on 22/01/2020 - 13:22
        -1

        Sounds good to me - make sure he knows what is expected of him regarding housework, also having people over etc Your house, your rules.

        edit: Housework is important because after 6 months you are going to be feeling pretty resentful if you're supporting him all this time and he isn't pulling his weight in other ways.

      • blawler05 on 23/01/2020 - 11:02
        -1

        Speak to a tax professional. $100 per week could be considered commercial price depending on your area/ property

        https://flatmates.com.au/share-house-sydney-cabramatta-2166-…

        Share house in sydney $100 per week including bills, these are the data points the ATO will consider on making a judgement if the income is commercial or a domestic arrangement.

  • Stumars on 22/01/2020 - 17:18

    whats the wife think of this?

    the bro could well get on her nerves pretty quick, so need enough compensation to be worth it for her

  • [Deactivated] on 22/01/2020 - 20:02

    Op, you probably were an international student once too. How much could you afford to pay per week? Charge him that with maybe a 10% discount since he's family.

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