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Property Hawk

Final Rental Payment


Rental period confusion

One of the most confusing aspects of letting out a property is calculating the final rent payment.  What on the face of it seems a pretty straight forward matter is complicated by the fact that we are still adhering largely to a Roman system of measuring time e.g. the Roman calendar.  This quaint system means that we have a series of months of varying lengths from 28 day to 31 days and then just to confuse things even more we even have one month that doesn’t know whether it is 28 or 29 days long! 

Given that most tenancies are monthly it is theoretically possible to start a tenancy on the 31st, the last day of the month for 5 months of the year.  This can instigate a whole load of confusion given that should the tenant move out at the end of the 6 month tenancy, there is a good chance that the month in which the tenancy comes to an end will have less than the 31 days.  What should I do in this situation?

Final rent payment – law & practice

Whilst the above scenario is not likely to be that common, this confusion is useful in that it helps to highlight the law.  Legally most Assured Shorthold Tenancies including the one available free on Property Hawk relate to a calendar month. Therefore in the scenario set out above, legally the tenancy comes to an end on the last day of the month.

This may leave your tenant feeling aggrieved that they have to pay an extra days rent.  This situation is exacerbated if the tenancy comes to an end in February where they could loose out by two further days.  Some landlords feel uncomfortable with this apparent inequity.  Not wishing to be viewed as money grabbing property owning capitalists they together with some letting agents adopt a different system to generate residual rent amounts.  This namely involves calculating the final period in terms of days. 

In adopting this system there is the added advantage of being consistent regardless of the tenancy dates.  For instance, in the scenario outlined above where the tenancy commenced on the 31st but then ended on the 28th February. The final rent payment is calculated by measuring the length of the last rental period, which starts on the 31st and finishes on the 28th; a period of 28 days.  It is then just a case of calculating the total rent payment for the year and then dividing this by 365 to give you a daily rental amount and then multiplying it by the final rental period i.e. 28 days to give the final rent due.  This is how the Property Manager on Property Hawk calculates the final payments within its’ digital rent book.  Now the more pedantic amongst you will point out what about the time of the day, should I include the day that the tenant moves in and moves out?

Time the tenancy starts

I have already made the point that legally a six month tenancy is a six month tenancy.  This means that if the tenant moves in at 11am on the 11th of January, their tenancy finishes at 11am on the 11th of June.  If the tenants are not out by then you can charge them an extra days rent.  However, most landlords with an ounce of humanity would not charge their tenants a whole days rent if they were a couple of hours late, particularly when the property was going to be empty anyway.  But be clear, legally you could.

How the Property Manager calculates the final rent payment


Property Hawk’s Property Manager the property management software for landlords means that which ever system you decide to adopt in managing your properties, the final payment will be right.  This is because that whilst the digital rent book calculates the final rent payment based on the number of days in the last rent period.  Should you adopt a different approach, such as the legally recognised approach outlined above which recognises that a tenancy relates to a period of calendar months. You are always able to alter the final sum due.  This flexibility ensures that your digital rent book will always give you an up to date and accurate rental balance for all your properties.

MORE ARTICLES ON RENTAL PAYMENTS

Non payment of rent

Advanced rent legal update

Dealing with rental arrears



Comments (3)

I'm not keen on rental periods starting on a differant day each month so rather than collect rent on the 28, 29, 30 & 31st I try and start the tenancy on the 1st instead. This involves a one off adjustment at the very start when both parties are on good terms and eager to please one another. I find that works well for me.
#1 - Steve Masters - 10/31/2015 - 07:54
Final Payment
Sorry, but reducing the rent for a February end is silly.
Assuming start on 31st August, there are 4 31st nights that the tenant has occupied: August, October, December, January.
Does the Landlord get compensated?

On the other hand, there are several six month combinations including 31 day month pairs (July & August, December & January) that total 184 days - which is more than half a year.

If one insists on being "fair" rather than expedient, one should calculate daily for the whole period (181 to 184 days) with an odd amount in the first month (like Council Tax.
#2 - Jules - 01/14/2016 - 12:53
Wonderful! So simple. Has anyone ever wondered how to fill out forms online? I have, and found a simple service. I've found PDFfiller - online service for forms filling. It's pretty easy to use and pretty cheap. You can find fillable Residential Lease Agreement 2 here https://goo.gl/ozOH45
#3 - marget boyes - 11/11/2016 - 07:52
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