Prorated Rent: A Fair Solution for Landlords and Tenants

Prorated rent is the portion of rent that tenants owe based on the number of days they occupy a rental unit during a billing period. It ensures that tenants pay only for the time they occupy the unit, while allowing landlords to charge renters fairly.

Read on for an overview of this important rental concept, from how to calculate prorated rent to common questions you should have answers to. Let’s dive in!

How Does Prorated Rent Work?

Prorated rent works by calculating a tenant’s rent in relation to the number of days they occupy the space.

Even if your tenant is moving in on the first of the month, you should discuss your stance on prorating rent (or how prorated rent works according to your lease) upon move-out to be one step ahead of the game. If you’re open to it, you could consider including a clause that specifies that the tenant will only be required to pay the prorated amount if they move out earlier in their final month than anticipated.

When Should You Prorate Rent?

Instead of asking yourself what is prorated rent, you should focus on when you should be prorating rent. Here are some instances where it could be beneficial for tenant and landlords:

• Move-In Dates: If a tenant's move-in date is after the start of the rental period, prorating rent ensures that they only pay for the days they actually occupy the property.
• Move-Out Dates: If a tenant moves out before the end of the rental period, prorating rent ensures that they are not charged for the days they did not occupy the property.
• Rent Increases or Decreases: If the landlord changes the rent amount during the rental period, prorating rent ensures that the tenant only pays for the days at the old rate before the change, and the new rate after the change.
• Lease Extensions or Renewals: If the lease is extended or renewed during the rental period, prorating rent ensures that the tenant only pays for the days at the old lease rate before the extension or renewal, and the new lease rate after the extension or renewal.
• Partial Use of the Property: If the tenant only uses a portion of the property, such as one bedroom in a two-bedroom apartment, prorating rent ensures that they only pay for the portion of the property they use.

How to Calculate Prorated Rent

Landlords typically use the number of days in a month or the number of days in a year and the billing date. However, you can use a prorated rent calculator or look at prorating rent using these formulas.

• Daily Rent Amount = Monthly Rent Price / Number of Days in that Month.
• Prorated Rent Amount = Daily Rent Amount x Number of Days Tenant Lives in the Property.

Now that you have a better understanding of how to calculate prorated rent let’s look at whether or not you are required to prorate rent.

Are Landlords Required to Provide Prorated Rent?

In most cases, there's no legal obligation on the landlord's end to offer tenants an adjustment or any type of prorated rent. Tenants shouldn't place any bets on settling a prorated rent agreement if they decide to move out early. As early move-outs are usually the tenant's decision, landlords may not feel obligated to adjust the amount due because the tenant has already committed to that month.

Tenants are in a much better position to negotiate prorated rent before they've signed their name on any dotted lines. That’s why it’s important to discuss these terms with a prospective tenant before signing the lease agreement.

Final Thoughts

The good news is that prorated rent isn't nearly as complicated as it sounds. The practice allows renters to pay for the time they use the space without worrying about breaking a lease. That’s why many landlords understand that lives often defy the strictness of calendar years, which is why prorated rent started in the first place.