Ideally, when someone rents out a home, they’d move in the following month. However, this doesn’t always happen in reality. Some people need to move in urgently, like in the middle of the month. Luckily, when that happens, you don’t necessarily have to pay that entire month’s rent. In other words, the tenant could pay a prorated rent, an amount that reflects the number of days you’ve lived in the rental.
But what does prorated rent mean? Let’s define that in detail, provide examples of how people use it, and help you learn how to calculate it. Read below to learn more.
What is Prorated Rent?
In simplest terms, prorated rent generally refers to a rent amount the landlord adjusts according to how many days you’ve lived in an apartment. Experienced property management companies in Baltimore and elsewhere offer this as an option when tenants move in/out midway through the month. This way, for that month, you can pay the rent only for the days you’ve stayed in the rental.
To give an example, let’s assume a tenant moves into a rented apartment on January 16th. If this happened, they’d be a tenant for nearly half of that month. With prorated rent, that rent could also be nearly half of what it’s normally supposed to be for the entire month.
When and Why Is Prorated Rent Used?
Some local laws require landlords to follow their regulations around prorated rent. However, landlords may also offer it by choice, for their own reasons.
Typically, there are three main instances under which prorated rent can come into play:
- If the tenant moves in in the middle of a rental period (like, in the middle of a month when the rent covers that full month)
- If the tenant moves out in the middle of a rental period
- If the tenant is paying only a portion of their rent (for instance, if their home was inhabitable for a period)
Why Landlords Can Benefit from Prorated Rent
Prorated rent makes it easier for landlords to place tenants. Tenants have more incentive to pick the landlord’s rental among others since the prorated rent makes it more affordable. So, while it may cost landlords lost rental money in the short run, it can also help landlords fill vacancies that they otherwise wouldn’t get any rent from, period. Furthermore, it can foster tenant loyalty. It shows that you’re looking out for your tenant’s financial wellbeing, that tenants can trust you to give them a fair deal.
Fairness: Prorated rent helps make the rental rate fair for tenants. After all, without it, tenants could be required to pay for the entire month even though had only stayed for part of it. So, landlords may want to make tenants pay only for what they’ve actually used, nothing more, nothing less.
Relationship Building: Proration rates show consideration for the tenant’s financial situation, which helps foster a positive tenant-landlord relationship.
Avoiding Conflicts: By discussing this from the start, landlords and tenants can minimize the possibility of any arguments down the line. This way, each party won’t need to battle over how much the tenant is on the hook for. You won’t have to split hairs and scrutinize every little detail of that month to find an answer.
How Do You Calculate Prorated Rent?
Calculating prorated rent is simple. You just need to find how much rent the tenant pays daily, then multiply that by the number of days the tenant is staying for the rental period (e.g., a month). Here’s how you can go about it:
Again, let’s assume the tenant moves in on January 16th, and the full rent is $1200 per month. We’ll calculate the daily rent for this situation:
- Divide $1200 by 31 (some local courts count all months as 30 days, no matter their actual length, so you should check your area’s policies)
- $1200 ÷ 31 = $38.71 per day.
- Multiply the daily rent by the number of days the tenant will occupy the rental: $38.71 × 15 = $580.65.
In this scenario, the tenant will pay $580.65.
Questions and Answers
Does prorated rent apply only to move-ins and not to move-out?
Prorated rent can apply to both. With it, if a tenant vacates a property before the end of the month, they only have to pay for the days they were there, and vice versa.
Is prorated rent applicable for short-term leases?
Yes, landlords can apply prorated rent to short-term leases. You simply would divide the rent by the lease’s length in days, rather than dividing it by the month’s length in days.
Can prorated rent be applied to annual leases?
Yes! Again, you would divide the rent amount by your lease’s length in days, rather than dividing it by the month’s length in days.
Want a Better Rental Experience? Let BMG Help
Prorated rent can be a win-win for tenants and landlords alike. For tenants, it means they don’t have to be saddled with paying for rent they’re not even using. In turn, landlords can also use it to reduce vacancies and foster tenant loyalty.
Bay Property Management Group can bridge the gap between both parties to find solutions that work for all parties. Our professionally trained team can crunch the numbers for you. We can ensure that tenants get a fair deal on their housing while also ensuring that deal works for the landlord’s bottom line. In essence, we can handle all the calculations, market comparisons, and “what-if” considerations so everyone’s happy.
And that’s far from all we do. We also handle repairs and maintenance, move-in and out procedures, drafting lease agreements, and compliance with tenant and landlord rights. So, if you’re a tenant, look at our listings for a rental with exceptional customer service. As for landlords, contact us today to let us take your landlord duties off your plate.