Changing the rent day for a tenancy very often causes confusion for parties to the agreement so here is a quick guide to explain how it works.
The day rent falls due, commonly referred to as the rent day, is part of the tenancy agreement. For a typical Assured Shorthold Tenancy (AST) the agreement will be that rent is paid in advance and the rent day is the first day of the period which is a calendar month. For example for a tenancy starting on 23rd July, rent will be payable in advance on 23rd July and will cover the period 23rd July to 22nd August inclusive. For the next period, the rent day will be 23rd August and will cover 23rd August to 22nd September inclusive. The period of the tenancy (23rd-22nd) remains the same for the life of the tenancy regardless of the number of days in a period which will vary slightly as the number of days in calendar months vary.
There will be occasions when the landlord or tenant wish to change the rent day, before the commencement of a tenancy or during a tenancy. For example the landlord may wish to change the rent day to align with the day mortgage payments are made. Likewise the tenant may wish to change the rent day to align with pay day.
Changing the rent day does not change the period of the tenancy
One of the confusing points for landlords and tenants is that changing the rent day does not change the period of the tenancy. In the example above, changing the rent day to say the 1st of each month does not change the period of the tenancy (23rd-22nd). In this example above the fixed term of the tenancy ends on the 22nd of a month and so it follows that the periods of the tenancy are the same as those for which rent was last paid I.e. from 23rd to 22nd of each month. Why is this significant? Any subsequent notice requiring possession or notice of termination should expire on the 22nd of a month and not the day before the rent was due in this example the 1st)
How rent is calculated
Where it is agreed the rent day is to be changed, this will change the number of days for which rent is due and therefore the amount of rent payable at the first (or next) rent day. The correct way to apportion rent is always on a yearly basis from the Apportionment Act 1870 Calculate a full year’s rent; then divide by 365 for the daily rate. £950 p.m. x 12 = £11400 PA or £31.24 per day.
To assess how many days rent are due, ignore the day of the month rent is paid; what counts is the day of the month rent is payable.
Using the example tenancy above consider the following scenarios:
From the start of the tenancy the tenant wants to pay rent on the 1st of each month – To align the rent day with the period of the tenancy after the fixed term expires, make the fixed term of the tenancy from 23rd July to 30th January. This way when the fixed term expires, the rent day will be at the start of each (monthly) period. The rent payable at the first rent day will be for the period 23rd July to 31st August inclusive I.e. 40 days at £31.24 per day which equates to £1249.60. Each subsequent rent will be £950 payable on the 1st of every calendar month.
From the start of the tenancy the landlord wants rent to be paid on the 15th of each month – To align the rent day with the period of the tenancy after the fixed term expires, make the fixed term of the tenancy from 23rd July to 14th February. That way when the fixed term expires, the rent day will be at the start of each (monthly) period. The rent payable at the first rent day will be for the period 23rd July to 14th August inclusive I.e. 23 days at £31.24 per day which equates to £718.52. Each subsequent rent will be £950 payable on the 15th of every calendar month.
During a periodic tenancy the tenant wants to change the rent day to the 1st of each month – In this scenario assume the example tenancy above was for a 6 month fixed term and the change of rent day is agreed on 10th March – The rent payable at the next rent day after this is agreed will be for the period 23rd March to 30th April Inclusive i.e. 39 days at £31.24 per day which equates to £1218.36. Each subsequent rent will be £950 payable on the 1st of every calendar month. Alternatively the landlord may agree to accept a smaller amount at the next rent day to cover the period 23rd March to 31st March I.e. 9 days at £31.24 per day which equates to £281.16 with the next rent payment of £950 due on 1st April.