What is Prorated Rent, and How Do You Calculate It?

It’s barbecue season and you’re short one pack of hamburger buns. You run to the grocery store, grab an 8-pack off the shelf, and jog to the nearest checkout aisle. But when the clerk scans the barcode, the jumbo-sized 24-pack rings up. Why should you pay for 24 buns when you’re only getting eight?

The same problem can apply to monthly rent. People only want to pay for the days they’re actually living in a rental property.

Prorated rent can help. Know how to navigate and calculate prorated rent and you could save hundreds or thousands of dollars on your first or last month’s rent.

What is prorated rent?

Prorated rent is a partial rent payment based on the number of days a tenant occupies a rental property. Instead of paying an entire month’s rent, you only pay a fraction of it.

The word prorated comes from the Latin term pro rata, which means “in proportion.” Prorated rent is the amount of rent you owe in proportion to the amount of time you’ll spend living in the property.

Prorated rent usually applies to your first or last month, but only if you won’t be living in the property the entire month. If you plan on living there the whole month, you won’t need to worry about asking a landlord to prorate your rent.

This concept can apply to almost any property that requires a rental or lease agreement. Prorated rent can factor into the leases of apartments, condos, houses, and anything in between.

Is prorated rent considered normal?

Prorated rent is common practice in the renting world, but the law usually doesn’t require it. Some landlords will automatically lower your rent based on your move-in or move-out date. But other landlords will charge the full rent no matter when you move in.

Landlords may refuse to prorate your rent, even after you formally request it. This can put you in a costly spot, but landlords have the right to charge the entire month’s rent if their property is in an area that doesn’t legally require prorated rent.

To find out whether prorated rent is a legal requirement where you live, check the landlord-tenant laws in your state or local area. This information is usually available online for anyone to access.

Check your lease or ask your landlord (in writing)

If possible, bring any prorated rent questions to the landlord before you sign the lease agreement. If you have the lease in front of you, see if it already includes information about prorated rent.

If you don’t have the agreement yet and want to move in after the billing cycle starts, ask the landlord whether they plan to prorate rent or not. If they say no, ask them if they’d be willing to make an exception for you.

Try to get their answers in writing so you can reference them later if you need to. This is usually good practice for any questions you have about rental properties.

How to calculate prorated rent

Let’s say you’re looking at apartments in Houston, TX. You fall in love with a $1,500/month unit and submit your apartment application. The billing cycle starts on the first of the month, but you don’t want to move in until March 22.

If the landlord agrees, how will they calculate prorated rent? They usually stick to one of three common methods:

1. Calculate by days in a month

Many landlords simply divide the total monthly rent by the number of days in that month.

How to calculate rent this way:

$1,500 (monthly rent) / 31 (days in the move-in month) = $48.39 rent per day

March 22 (move-in date) = 10 days of occupancy

$48.39 (daily rent) X 10 (days) = $483.90 prorated rent for the first month

You’ll always divide by either 30 or 31 days with this method, unless your move-in or move-out date is in February. In that case, you’d divide the full rent by 28, or 29 during a leap year.

You can refer to this table to find your daily rent:

2. Calculate by days in a “banker’s month”

A banker’s month is always 30 days, regardless of how many days are in the current month.

You’ll either break even or pay a few dollars more in daily rent if your landlord uses banker’s months. You’ll only pay less in February.

How to calculate rent this way:

$1,500 (monthly rent) / 30 (days in a banker’s month) = $50 rent per day

March 22 (move-in date) = 10 days of occupancy

$50 (daily rent) X 10 (days) = $500 prorated rent for the first month

Since March has 31 days, you’ll pay a little more if your landlord calculates rent with banker’s months. About $16 more, in this case.

3. Calculate by days in a year

This method attaches the same daily rent to every day of the year, no matter what month it’s in. There’s one extra step here: finding the total amount of rent payments for the entire year.

How to calculate rent this way:

$1,500 (monthly rent) X 12 (months in a year) = $18,000 total yearly rent

$18,000 / 365 (days in move-in year) = $49.32 rent per day

March 22 (move-in date) = 10 days of occupancy

$49.32 (daily rent) X 10 (days) = $493.20 prorated rent for the first month

During a leap year, divide your annual rent by 366 instead of 365 to get your daily rent rate.

What to do if a landlord won’t prorate your rent

You scouted the perfect apartment in Tampa, FL and asked the landlord if they’d prorate the rent. But they said no.

If prorating isn’t in the lease agreement (or required by law where you live), your options may be limited:

• If you haven’t signed an agreement yet, you have the freedom to back out and find a landlord who will prorate rent.
• If you’ve already signed the agreement, you probably won’t want to break the lease. Early termination fees can amount to several months’ rent, which would outweigh any money you’d save through prorated rent. Check your lease agreement for your landlord’s specific terms.

Prorated rent FAQs

When should you ask a landlord about prorated rent?

Try to ask them before you sign the lease agreement. If you don’t have the lease yet, ask the landlord what their policy is (in writing, if possible).

If you already have the lease in hand, check to see if the landlord already plans to prorate rent.

Can prorated rent apply to move-in and move-out dates?

Yes, rent can be prorated for either (if your landlord agrees). Tenants may pay a prorated amount of the first month’s rent, last month’s rent, both, or neither. It all depends on your schedule and the landlord’s policies.

But remember, prorating rent usually isn’t required by law, so your landlord can choose to bill you a full month’s rent if they want to.

If the landlord asks you to move out before the end of the month while you’re still living in the property, they should include a prorated amount of rent as part of their offer.

Is prorated rent calculated using 30 or 31 days?

It depends on whether your landlord uses the “banker’s month” rule. If they do, they’ll always divide the monthly rent amount by 30, even if that month has 28, 29, or 31 days in it.

Are security deposits prorated too?

No, the security deposit is separate from rent. You’ll still need to pay the full security deposit, no matter when you move in. Most deposits are equivalent to one full month of rent.

Rent is prorated every February, right?

Sadly, no. February may be short, but it’s just another month in your landlord’s eyes.

The post What is Prorated Rent, and How Do You Calculate It? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.