Wrong Pro Rata Rent Calculation by Real Estate Agent

justice4521

I have an interesting question on pro rata rent as calculated by real estate agents.

I had a tenant who moved in on 26 June 2025 and was paying rent on a quarterly basis. The monthly rent was £3,229.13 and so quarterly payment was £9,687.38.

According to the agent, the last day of his second quarter was 25 December.

Initially, the tenant gave his notice to leave on 11 January. That was 17 extra days after 25 December, so the real estate agent asked for £1,804.77. This was £3,229.13 x 12 / 365 x 17. I agree that this rent-per-day method was an accurate method to calculate pro rata rent (in which rent-per-day is £3,229.13 x 12 / 365 = £106.16).

There was a change of plans so I agreed that the tenant leave on 19 December. So instead of 17 days extra, he moved out 6 days early. I assumed this would simply be a refund of £106.16 x 6 = £636.96.

Instead the real estate agent did £9,687.38 minus £3,229 x 2 and 24 days (£106.16 x 24), which gave £681.54. A difference of almost £50 with £636.96. I disagree with their method. It combines two separate calculation conventions, a monthly approximation and a daily rent-per-day.

More interestingly, if I calculate rent-per-day on the overall period: tenant stayed 177 days (26 June - 25 December) and paid £19,374.76 overall. 177 x £106.16 is £18,790.88 so the most accurate refund based on rent-per-day is £583.88 (£19,374.76 - £18,790.88). (This also differs from £636.96 and I know the reason but I'll leave it out to not complicate the discussion).

What do you guys think? I already know the rent-per-day approach for the overall period is the most accurate and everything else is a less precise approximation. The real estate agent just insists they will stick to their "standard method".

What do you guys think? Are there any laws in the UK that regulate such calculations?

PS: I am investment professional so I have around 10 years of experience in such calculations so I am comfortable with the maths involved here. But I am missing the legal framework that exists for real estate agents on this subject.

Tabieth

I think that given the amount of rent and for the sake of approx £50, it’s not worth thinking about. 

(My response is probably not that helpful but I’d put this in the “life is too short” category). 

marcia_

Tabieth said:

I think that given the amount of rent and for the sake of approx £50, it’s not worth thinking about. 

(My response is probably not that helpful but I’d put this in the “life is too short” category). 

 Totally agree 

daveyjp

As its a monthly rent the agent approach is acceptable.

The tenant has paid for three months.  Two of these months were completed - September and November only have 30 days, hence the difference in the figures between monthly and daily,

The daily calculation only needs to be for the part month of December.

justice4521

Tabieth said:

I think that given the amount of rent and for the sake of approx £50, it’s not worth thinking about. 

(My response is probably not that helpful but I’d put this in the “life is too short” category). 

I appreciate that. Technically, the difference is around £100, so I basically give 1 day for free to the tenant. Not a big concern overall.

The main concern/confusion is to do with understanding why a respectable real estate agent does not use an accurate methodology for this. Because if their approach is mathematically wrong, they are doing it wrong with thousands of lettings across the country.

Another way to look at it is, the real estate agent calculates the overpayment for 5 extra days in a different way than a refund for someone leaving 5 days early. Obviously, payment for 5 days more or refund for 5 days less should have given an exact identical amount, but it doesn't. It makes no mathematical sense.

justice4521

daveyjp said:

As its a monthly rent the agent approach is acceptable.

The tenant has paid for three months.  Two of these months were completed - September and November only have 30 days, hence the difference in the figures between monthly and daily,

The daily calculation only needs to be for the part month of December.

For argument's sake, let's assume you (and the agent) are correct and this method is fair.

Assume 2 scenarios. Tenant overstaying for 5 days vs. leaving 5 days early. Your mathematical calculation would result in different figures for both, which is where I disagree. Staying 5 days more or 5 days less should have given an identical result. (i.e. should have been mathematically symmetrical)

In my case, the difference was around £50 when I was expecting identical results and that's what prompted me to question their methodology.

daveyjp

It would end up with different figures because the two calculations are different. 

The rent is paid on a monthly basis.  So that is how the calculation is done.  On a monthly agreement the tenancy should end on the day before the rent is due for the next month.  So either 25 December or 24 January.

The only way your calculation works is if the rent is offered on a daily rate, but that means a changing the rent due almost every month to reflect there being  28,29,30 or 31 days in a month.

Altior

daveyjp is correct in my view. The contract was a monthly rate not a daily rate. So subtracting a daily rate for an unused part of the month doesn't work. It should be consistent.

justice4521

daveyjp said:

It would end up with different figures because the two calculations are different. 

The rent is paid on a monthly basis.  So that is how the calculation is done.  On a monthly agreement the tenancy should end on the day before the rent is due for the next month.  So either 25 December or 24 January.

The only way your calculation works is if the rent is offered on a daily rate, but that means a changing the rent due almost every month to reflect there being  28,29,30 or 31 days in a month.

I suppose that relates to the tenancy agreement, in which a monthly rate is given and the duration (which was 12-months, so rent-per-day over 365 can be calculated). Ofc, contractual rent is not based on a daily rate.

I just cannot comprehend how the rent due for extra 5 days not be equal to refund of rent if the tenant leaves 5 days early. Despite identical time periods, it costs different amounts of rent depending on the situation, which I find bizarre. (i.e. rent for staying 1 more week is different to rent refunded for staying 1 week less)

Altior

The working presented by the agent is slightly odd in my opinion, but the answer is also correct (in my opinion).

It's about what they did enjoy, rather than working back from what they didn't. And that includes a 30 day month.

The first two full months are straight forward, then it's 5 days of Nov (to 30th) and 19 days of Dec (to 19th). So two full months and a partial month of 24 days. 

justice4521

Altior said:

The working presented by the agent is slightly odd in my opinion, but the answer is also correct (in my opinion).

It's about what they did enjoy, rather than working back from what they didn't. And that includes a 30 day month.

The first two full months are straight forward, then it's 5 days of Nov (to 30th) and 19 days of Dec (to 19th). So two full months and a partial month of 24 days. 

Currently, the agent calculates 24 days x £106.16 and subtracts this from £3,229 to backsolve the appropriate refund, which comes at £681.

With the 30-day month approximation, they could have also said £3,229 divided by 30 and multiplied by 6, to get to a refund. That would have given £645 instead.

The weird math comes from the fact that, their calculation includes both monthly approximation for 2 months and then exact rent-per-day (based on 365) for 24 days (combining 2 different calculation methods). Ultimately, it results on those 24 occupied days having a rent-per-day of £106.16 and a rent-per-day of £113.53 (£681 / 6) for 6 days not occupied.

How can 24 days of a month cost £106.16 per day and the remaining 6 days cost £113.53 per day? Its mathematically bizarre.