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Is there a formula to calculate monthly rent for an odd number of days?

Given that not every tenant checks in at the start of the month and checks out at the end of another month, the term of the tenant's stay is mostly odd. I would expect this to be a commonly faced problem between most tenants and house-owners during the final settlement of rent.

The following is an example:

I moved in to a rental flat on Feb 28, and I'm scheduled to vacate on July 4. The rental agreement states that the monthly rent is 500, which shall be paid out in advance on the same date of moving i.e. 28th of each month. I have paid 500 each month so far, for Mar, Apr, May and Jun (so 2000 so far). How much is the balance rent to be paid when I vacate on July 4?

I've tried approaching this problem several different ways, and can't seem to agree on the right one.

Method 1: Calculating on a pro-rata basis for each month separately:

Rent owed in Feb = (500/28) *  1 =  17.86  
Rent owed in Mar = (500/31) * 31 = 500.00  
Rent owed in Apr = (500/30) * 30 = 500.00  
Rent owed in May = (500/31) * 31 = 500.00  
Rent owed in Jun = (500/30) * 30 = 500.00  
Rent owed in Jul = (500/31) *  4 =  64.52
Total        = 2082.38
Balance owed =   82.38

Method 2: My owner's method: Payment for odd days is based on the averaged value for the year:

Rent paid from Feb 28 to Mar 27 = 500.00
Rent paid from Mar 28 to Apr 27 = 500.00
Rent paid from Apr 28 to May 27 = 500.00
Rent paid from May 28 to Jun 27 = 500.00
Rent to be paid from Jun 28 to Jul 4 (7 days) = (500*12)/365 * 7 = 115.06
Balance owed =   115.06

Method 3: Using the averaged value for the year for the full duration of my stay (to account for the fact that the months have variable days):

# of days from Feb 28 to Jul 4 = 127
Total rent to be paid = (500*12)/365 * 127 = 2087.67
Balance owed =   87.67

I see that my owner's reasoning brings about a rather high sum. Is there a standard used by tenants and house-owners to settle this kind of a problem, or is it left to the discretion of the owners?

For those curious, I'm living in London and all calculations above are in GBP (£). However, the nature of this problem should apply globally regardless of currency.

UPDATE:
Thanks everyone for all the different insights here. I have accepted Steve's answer since the example here was personally from London, and Steve has provided an insight at how tenancy agreements and notices work in the UK.

However, the correct answer is that there is no one answer -- as a variety of answers here point out, calculation of rent settlement is dependent on multiple factors, including, but not exclusive to:

  • Tenancy and Contractual agreements and terms signed when the tenant moves in
  • Prior negotiations between the tenant and owner
  • Notice periods and local laws governing notice
  • Variations in calculation methods depending on geography

Summary: Be sure to properly read and understand the contract, and negotiate and agree the settlement and calculation terms before you move in.

  • 1
    That is why in Australia we base it on weekly rent. Much easier to work out. – Victor Jun 2 '15 at 12:11
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    The first sentence of @mhoran_psprep's answer says it all. All the rental agreements that I have encountered (in the US) spell out how rent due is to be calculated for odd periods of time. Many say that for periods less than a full calendar month, the daily rate is (1/30)th of the monthly rate. – Dilip Sarwate Jun 2 '15 at 13:59
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    anyhow, your owner method seems the most reasonable.It's quite weird to think that the rent you pay on the first of march is less than what you pay on 28th february because febraury has fewer days. – Ant Jun 2 '15 at 18:19
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    This question is a perfect illustration that rental terms are entirely different in every country! – cnst Jun 2 '15 at 21:34
  • The period you didn't pay for yet is Jun 28 to Jul 4. Charging 7 days of rent for that does not seem to be high at all. Do you really think it makes sense to include the start of all paid-for terms in the calculation of how much you need to pay for those specific days? – Dennis Jun 3 '15 at 13:43
12

If the tenancy agreement you signed was an Assured Shorthold Tenancy, and if it was for the minimum fixed term of 6 months, then there is no default way of calculating any rent owed for an odd number of days.

Why? Because if these assumptions are true, you are liable for the full rent for the whole 6 months, even if you leave before then.

If you wish to leave early, it is at the landlord's discretion to accept that; and likewise, it's at their discretion to determine how much rent is owed.

Method 2 keeps things simple if calculating across month boundaries, as the rent per day is constant regardless of the month.


A couple of footnotes:

Firstly, the question states:

Given that not every tenant checks in at the start of the month and checks out at the end of another month

It doesn't work like that in the UK, as tenancies can start on any day of the month. If your tenancy starts on day x of a month, then it will end on day x - 1 of some future month -- unless agreed otherwise by the landlord and tenant.

At the time of writing, this applies whether the tenant is leaving voluntarily, or whether the landlord has asked the tenant to leave by issuing a section 21 notice.

Secondly, some guidance as to the original question is offered by section 40 of the Deregulation Act 2015. This uses Method 1 to calculate rent owed in the final rental period.

However, it only applies if the landlord has issued a section 21 notice requiring the tenant to leave; and this section of the act doesn't come into force until 1st October 2015.

  • If six months' rent starting on 28 August would entitle one to stay until 28 February of the next year, until when would six months' rent starting on 31 August entitle one to stay? – supercat Jun 2 '15 at 20:49
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    @supercat: also 28 Feb (unless agreed otherwise), based on the quote on this page from Halsbury's Laws of England. – Steve Melnikoff Jun 2 '15 at 21:34
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What does the contract you signed say?

Unless the law (in the United States rental law is a state/local function) says otherwise any of your three options could be viable.

This also comes up when a house has to be rented back to the seller so they can move their stuff. There is a daily rate charged and it has to be based on something, thus it is specified in the contract.

Therefore it goes back to what you signed. If there is nothing in any of the paperwork you will have to check with the local applicable law. That law might also lay out the procedures for disputing any contract previsions. In the United States that could include small claims court or arbitration.

  • My approach when writing a lease was to rent for whole months, as I was renting a home, not running a hotel. – ChuckCottrill Jun 2 '15 at 23:53
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I would actually prefer a modified version of the 1st method:

Rent paid from Feb 28 to Mar 27 = 500.00
Rent paid from Mar 28 to Apr 27 = 500.00
Rent paid from Apr 28 to May 27 = 500.00
Rent paid from May 28 to Jun 27 = 500.00
Rent to be paid from Jun 28 to Jul 4 (7 days) = (500/30) * 7 = 116.67
Balance owed =   116.37

The reason is that since your payment date is the 28th, the months should be calculated as of that day, not the first of the month as you did in method 1. With this method, because June 28 to July 27 is 30 days, you work out a daily rate with that number (500/30). Since you are paying for 7 days in that "month" (not calendar month, but rent month), then you multiply that daily rate by 7.

Had you negotiated a daily rate, but paid it monthly, method 3 might make sense. But then I'd expect the amount to go up/down each month depending on the number of days in that month.

Had you negotiated a monthly rate explicitly based on calendar months (regardless of the day of the month you paid), then method 1 would make sense. But in this case you would have paid an "extra" 17.86 for February 28th when you moved in, which you didn't.

I'm not sure I'd ever use method 2. It just seems like a simplified version of what I suggested above--simpler in that the daily rate is the same for all months.

1

You do not appear to specify the exact words from the rental agreement. It appears that in the UK weekly rentals are quite common; however, in the US, you normally pay on a monthly basis.

What this would have normally meant in, say, California, is that you'd pay for Feb 28 + the whole of March upon moving in, on Feb 28, and then the payment for each subsequent month has to be due by the 4th or 5th (the exact procedure is outlined in the contract).

However, interestingly, California state law says that unless otherwise agreed upon in the contract, you must pay for a given month by the end of said month; but nearly every single residential contract does specify otherwise!

What this question brings is that rental customs are quite different from country to country. For your specific situation, I suggest that you take a closer look at the exact terms specified in the contract. It doesn't matter what you think is right or what the landlord thinks is right, if a disagreement is in place, and neither method follows the contract.

0

Most rent is charged by the week. Round up to a week and pay by week on a pro-rata basis? Weekly rent is monthly rent/4.33 The figure 4.33 comes from 52 weeks/12 months = average of 4.3 weeks in a month.

http://www.vienetwork.org/index.php/usefull/accommodation.html

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I most cases, the law requires you pay up to the next rental period. Therefore, you cannot for example rent a house for "half a month". It really depends on the type of contract you have, but this is the normal case.

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    I wouldn't say this is the normal case in my experience. Many renters are willing to take what rent they can get if you give proper notice, even if that is a fraction of a month. – Nathan L Jun 2 '15 at 16:14
  • OP here. I'm a little astonished that there is so much misinformation in this thread, and now I got downvoted. In the UK, the common practice is for rental periods to start on an agreed date and last a minimum number of months. After that, it's month-by-month by default, where the minimum notice period is four weeks (or perhaps one month), to end on the date of the rental period. This means that there is typically no partial payment allowed. Look here for examples: goo.gl/0LN918 or goo.gl/vQfUsm or goo.gl/vDWCIJ. – Nicholas Hill Jun 2 '15 at 16:31
  • @NicholasHill: everything you say is true, with one caveat: if the landlord and tenant freely agree to change any of the terms, then they're allowed to. So if a tenant requests to leave after, say, 5.5 months, and the landlord agrees, then that's fine. If the landlord doesn't agree, then the original terms stand as written. (What is more likely in practice is that the old tenant will continue be charged rent until a new tenant is ready to move in.) – Steve Melnikoff Jun 2 '15 at 21:08
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30 days to a month is the most appropriate and accepted norm in the business world.

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