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.
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.