last month's pro-rata rent calculation

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    last month's pro-rata rent calculation

    Hi, I'm wondering if someone could tell me which is the standard way to calculate the final month's rent.

    I agreed that the tenant could move out early and would pay the final month pro-rata but am coming up with different figures depending on how I calculate it:

    Tenant moved in on 16th of the month and is now moving out on 3rd June. I calcuated the daily rent to be £26.63. (Monthly rent 810 x 12 / 365)but how do I calcuate the final sum?

    1) Tenant is staying an extra 19 days up to the 3rd June so daily rate x 19 = £505.97.
    OR
    2) Tenant is moving out 12 days early, so 12 x 26.63 = 319.56. 810-319.56 = £490.44.

    I automatically calculated it using the first method and then recalcuated using the second. There's quite a big difference in the two amounts and I'll probably charge the lesser rate if I can't get clarification but I was hoping someone could tell me if there was a standard way of doing it.

    Thanks very much.

    #2
    If the rent is payable monthly on the 16th of the month, then the rental periods run 16th - 15th. If the T has paid April 16th- 15th May inclusive, then you charge the daily rate for the period 16th May - 3rd June inclusive - 19 days - which is £505.97.

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      #3
      Thanks for the reply. That was my first thought and then I starting thinking too much.

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        #4
        This is interesting as I'm in the same situation; with a tenant moving out mid-month by agreement. Tenant wants to know how much to pay on the last rent day; either he pays 25 days' pro rata in advance; or he could pay the normal full month's rent and I reimburse him 6 days' rent when he moves out.

        Point is that as the OP says, the two methods end up with different calculations; I think in my case using the former method it ends up about £10 in my favour overall. Now I'm not about to fall out with a tenant over that, but out of interest is there a actually a precedent for how this should be calculated?

        Imagine this were February, and the tenant wanted to pay pro rata for 26 or 27 days out of the 28, and the difference between the two methods suddenly becomes quite significant!

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          #5
          IMHO, this is always the same problem and confusion:
          The formula above [810 x 12 / 365] is for apportionment on an annual basis but people want to use it within a calendar month, and when they do they obviously notice that something is off.

          In my view the correct way to use the formula above is to:
          1. Use the daily rent given for the formula to compute the rent owed from the beginning of the annual period,
          2. Compare with what tenant actually paid in rent,
          3. Adjust as needed.


          Originally posted by Ericthelobster View Post
          Imagine this were February, and the tenant wanted to pay pro rata for 26 or 27 days out of the 28, and the difference between the two methods suddenly becomes quite significant!
          If you consider that monthly rent is indeed the rent for that calendar month period then apportionment should not use formula above, but use number of days in month.

          E.g. T stays 26 days in February.
          T pays (26/28)x monthly rent or T pays monthly rent and you refund (2/28)x monthly rent: Same result.

          Or, you use the formula form post #1, but as said it will work out correctly only when used over a period of 1 year, not 1 month.

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