Whether you’re a first-time landlord or a tenant who has just found their ideal apartment, you may have come across the term prorated rate. Also known as pro-rata rent, it is simply rent that is calculated proportionately based on the actual number of days a tenant has occupied the unit. While it seems tricky at first, it’s actually quite an easy concept. So let’s take a closer look.
The Basics
Landlords tend to start charging rent from the first day of the month. In an ideal world, the tenant would move in and out on that day. However, there are many reasons why a tenant might need to move sometime during the month.
While landlords can begin the rent cycle on the exact day that the tenant moves in—i.e., the rent would be due on the 15th of every month if they move in on the 15th—this isn’t always possible. For example, if a landlord owns several rental units, keeping track would soon become challenging.
Prorated rent is a way for tenants to avoid paying for an entire month’s rent if they’ve moved in or out on another day. For example, if they move in on the 20th of September, they’d only need to pay ten days’ rent for that first month. Likewise, if they move out on the 8th of the month rather than the 1st, the landlord can charge the additional eight days using prorated rent.
How to Calculate Prorated Rent
There are several ways to calculate prorated rent, differing only in how the daily rate is established.
Calculating the Daily Rate
Each landlord has their preference, and some methods are better depending on the type of lease. The daily rate can be calculated based on the number of days: 1) in the specific month in question, 2) in the average month (30.42), and 3) in a banker’s month (30).
To arrive at the daily rate, divide the total rent by the number of days. For example, let’s imagine your monthly rent is $1,200, so for a specific month, the daily rate would be:
- $1200 / 30 days in months like September = $40
- $1200 / 31 days in months like October = $38.7
- $1200 / 28 days in February = $42.8
Meanwhile, if you use the number of days in the average month or a banker’s month, the daily rate remains the same regardless of the specific month:
- $1200 / 30.42 (average) days = $39.4
- $1200 / 30 days = $40
Landlords tend to use either a banker’s month or the number of days in an average month to calculate prorated rent on a yearly lease. Meanwhile, the specific month is generally preferred for short-term rental contracts.
Calculating the Prorated Portion
Whichever method you use to calculate the daily rate, the calculation for determining how much rent the tenant owes is:
Number of days x daily rent = prorated portion
For example, a renter would have to pay 11 days X $39.4 = $433.4 if they moved in on the 20th of October (assuming a monthly rent of $1,200 and using an average month system). Or 13 days X $39.4 = $512.2, if they moved out later, on the 13th of May, for instance.
When Is Prorated Rent Needed?
Landlords are generally not legally obliged to agree to offer prorated rent, although many do at the beginning of the lease term as it’s mutually beneficial. As a tenant, it can be more challenging to convince your landlord to prorate the rent at the end of your lease term if you’re planning to leave early.
If you want to leave later than the agreed lease expiration date, however, most landlords will be willing to comply as long as they don’t already have a new tenant lined up. Either way, the best advice is to discuss this with your landlord in advance.
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