How much rent refund to Tenant on departure?

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • How much rent refund to Tenant on departure?

    Had a tenant who was on an AST from 8th September 2008 to 7th December 2008.
    She left on 24th January 2009 by mutual agreement with the landlord. She had however paid her rent in advance until 7th February 2009.
    I have refunded the rent due to her but she has queried it. Could you guys be good enough to tell me how much you think it should have been?
    She paid £365pcm.
    Many thanks for any replies.
    Alidee

  • #2
    Originally posted by alidee View Post
    Had a tenant who was on an AST from 8th September 2008 to 7th December 2008.
    She left on 24th January 2009 by mutual agreement with the landlord. She had however paid her rent in advance until 7th February 2009.
    I have refunded the rent due to her but she has queried it. Could you guys be good enough to tell me how much you think it should have been?
    She paid £365pcm.
    Many thanks for any replies.
    Alidee
    Hi,

    The short answer is that it depends on what was agreed between her and the landlord. Strictly speaking, if the rent is payable in advance, the landlord need not have agreed to refund any of the rent - although I accept it may have been necessary to do so in order to negotiate a surrender and/or that it may also be fair to do so.

    So, if the point of your question is that there is some dispute over how to apportion days, you could always refer back to the above.

    Anyway, I would probably do it on the basis 7 31ths (for January) and 7 28ths (for February). I know some agents would go for 14 365ths of the annual equivalent rent, for simplicity, but this can sometimes give some slighly perverse results. Either way, though, the difference is pretty marginal.


    Preston

    Comment


    • #3
      Hi Preston
      Thanks for your answer - basically the LL needed the room back and she originally agreed to move out at end of January and then asked to move out a week early which was fine. LL also agreed that he would refund any rent overpaid as he was glad to get the room back.
      Hope my ramblings make sense.
      The way I worked it out was - she paid £365 in advance to 7th Feb.
      She should have paid - 8/1/09 - 24/01/09 which is £204 (17 days at £12).
      So I then took £204 from £365 she did pay which came to £161.
      Is this correct ?
      Thanks
      Alidee

      Comment


      • #4
        Originally posted by alidee View Post
        Hi Preston
        Thanks for your answer - basically the LL needed the room back and she originally agreed to move out at end of January and then asked to move out a week early which was fine. LL also agreed that he would refund any rent overpaid as he was glad to get the room back.
        Hope my ramblings make sense.
        The way I worked it out was - she paid £365 in advance to 7th Feb.
        She should have paid - 8/1/09 - 24/01/09 which is £204 (17 days at £12).
        So I then took £204 from £365 she did pay which came to £161.
        Is this correct?
        All previous answers are wrong. This is how to do it correctly.
        Rent = £365 per month.
        So rent = £4380 per year= £12 per day.
        T paid in full to 7 Feb.
        T left on 24 Jan.
        L owes T for 25 Jan. - 7 Feb. = 13 days = £156.

        ALWAYS use annual basis. All rents accrue from day to day. See s.2 of Apportionment Act 1870 (below)!

        Rents, &c. to accrue from day to day and be apportionable in respect of time

        All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).

        Comment


        • #5
          Originally posted by jeffrey View Post
          All previous answers are wrong. This is how to do it correctly.
          Rent = £365 per month.
          So rent = £4380 per year= £12 per day.
          T paid in full to 7 Feb.
          T left on 24 Jan.
          L owes T for 25 Jan. - 7 Feb. = 13 days = £156.

          ALWAYS use annual basis. All rents accrue from day to day. See s.2 of Apportionment Act 1870 (below)!

          Rents, &c. to accrue from day to day and be apportionable in respect of time

          All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.
          Hi

          I thought the Apportionment Act only applies to rent due in arrears (Elis V Rowbotham)? The rent in this case is due in advance and, therefore, is not capable of apportionment under that statute; rather, the apportionment would be by way of negotiation and should ideally have been settled before the surrender was accepted.

          (Having said this, the explanation of apportionment in my note - 7/31sts etc - looks like a load of nonsense. I forgot the question was about a refund whereas my answer relates to the calculation of daily occupancy rates so I will try to explain it more clearly in future.)

          I think Alidee's suggestion is fine.

          Preston

          Comment


          • #6
            Originally posted by Preston View Post
            Hi

            I thought the Apportionment Act only applies to rent due in arrears (Elis V Rowbotham)? The rent in this case is due in advance and, therefore, is not capable of apportionment under that statute; rather, the apportionment would be by way of negotiation and should ideally have been settled before the surrender was accepted.

            (Having said this, the explanation of apportionment in my note - 7/31sts etc - looks like a load of nonsense. I forgot the question was about a refund whereas my answer relates to the calculation of daily occupancy rates so I will try to explain it more clearly in future.)

            I think Alidee's suggestion is fine.
            Well, the Act does not make clear whether it applies only to rent in arrears. It does provide a fair way to calculate in both cases. Moreover, could one reasonably argue that T leaving earlier than date to which rent paid in advance should always have to write-off the surplus?
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment


            • #7
              Originally posted by jeffrey View Post
              Moreover, could one reasonably argue that T leaving earlier than date to which rent paid in advance should always have to write-off the surplus?

              Well, one could - but as Preston has pointed out (#2), presumably this refund was an agreed condition of the surrender in this case.
              'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

              Comment


              • #8
                Originally posted by jeffrey View Post
                Well, the Act does not make clear whether it applies only to rent in arrears. It does provide a fair way to calculate in both cases. Moreover, could one reasonably argue that T leaving earlier than date to which rent paid in advance should always have to write-off the surplus?
                Hi

                I agree, but the decision in Elis v Rowbotham seems quite clear and is certainly treated as good law in my working experience.

                On your second point, it may not be reasonable, but again I think it is clear in law that rent paid in advance need not be apportioned so it is always advisable for a tenant wishing to surrender to agree the terms with the landlord, including how rent paid in advance is to be treated.

                Preston

                Comment


                • #9
                  Yes the landlord is fine about giving a refund as it was mutually agreed with tenant that he would give her a months notice to leave but if she needed to leave earlier than this that would also be fine and she would be given a rent refund.He wanted the room back asap through no fault of the tenants.
                  It doesn't seem as though there is a straightforward answer so I'm glad i asked the question- thought I was just being a bit dippy
                  Alidee

                  Comment


                  • #10
                    [QUOTE=jeffrey;114148]All previous answers are wrong. This is how to do it correctly.
                    Rent = £365 per month.
                    So rent = £4380 per year= £12 per day.
                    T paid in full to 7 Feb.
                    T left on 24 Jan.
                    L owes T for 25 Jan. - 7 Feb. = 13 days = £156.

                    Hi, should this be 14 days not 13 ? Are not both the 25th and 7th included in this calculation?
                    Alidee

                    Comment


                    • #11
                      Originally posted by Preston View Post
                      I agree, but the decision in Elis v Rowbotham seems quite clear and is certainly treated as good law in my working experience.

                      On your second point, it may not be reasonable, but again I think it is clear in law that rent paid in advance need not be apportioned so it is always advisable for a tenant wishing to surrender to agree the terms with the landlord, including how rent paid in advance is to be treated.
                      Do you have a citation for the case report, please?
                      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                      4. *- Contact info: click on my name (blue-highlight link).

                      Comment


                      • #12
                        Originally posted by jeffrey View Post
                        Do you have a citation for the case report, please?
                        Ellis v Rowbotham [1900] 1 QB 740

                        Comment


                        • #13
                          Originally posted by Preston View Post
                          Ellis v Rowbotham [1900] 1 QB 740
                          Aha, ELLIS not ELIS! Found it.
                          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                          4. *- Contact info: click on my name (blue-highlight link).

                          Comment


                          • #14
                            So is the consensus that my sums were correct ? Just need to ask as I will need to contact the ex tenant tomorrow
                            Many thanks

                            Comment


                            • #15
                              Originally posted by alidee View Post
                              So is the consensus that my sums were correct ? Just need to ask as I will need to contact the ex tenant tomorrow
                              Many thanks
                              Hi

                              My view is that the method you have chosen is both acceptable and commonplace, notwithstanding that there are other ways it could have been done.

                              My argument is that statute doesn't give us an answer, so ideally this needs to be negotiated as part of the surrender or, failing that, you need to behave reasonably. I think you are doing so.

                              Preston

                              Comment

                              Latest Activity

                              Collapse

                              Working...
                              X