At the beginning and end of tenancies, landlords and tenants often need to calculate pro rata rent. Luckily, it’s really simple and we’ll show you exactly how to do it.
Definition of Pro Rata
‘Pro rata’ means divided in proportion. For example, if a tenant moves out of a property halfway through the monthly rental period, then you can calculate the rent that is owed for the half-month pro rata by taking the monthly rent and dividing in half.
This same method can be used in many contexts, such as the salary of full-time workers who go part-time. For example, an employee moving from a five-day week to a three-day week would see their hours dropping by 40%. Their pro rata salary would then become 60% of the original value.
Definition of Latin phrase and how to use the phrase ‘pro rata’
The term ‘pro rata’ comes from Latin. ‘Pro’ means according to and ‘rata’ means calculated. When used in English, pro rata can be an adjective, for example describing the rent in ‘pro rata rent’. It can also be an adverb that describes an action, as in ‘the rent was calculated pro rata’.
In American English, the verb ‘prorated’ has emerged, meaning to calculate pro rata. Although less common in the UK, this is sometimes used.
How to Calculate Pro Rata Rent
Confusingly, when it comes to rent there are two different methods that landlords and tenants need to know about depending on what you are trying to achieve.
Calculating rent pro rata
One method is used for calculating how much rent tenants must pay when moving out part way through a rental period (i.e. on any day that is not the final day of a rental period). This usually happens when a landlord serves a Section 21 notice which expired part way through a period. In these cases, the method you must use is described in the Housing Act 1988.
In these cases, you will need to multiply the monthly rent by the ratio of days elapsed in the period. For example, consider a tenancy with a monthly rent of £600. If a Section 21 notice is served and expires on the 10th day of a 30-day month, then you would divide 10 by 30 to get a third. You would then multiply £600 by a third to get £200. The amount of rent due for the final (partial) rental period is therefore £200.
Calculating maximum deposit sizes pro rata
The second method is used for calculating the maximum tenancy and holding deposit sizes. These deposits are limited to five and one weeks’ rent respectively. This means you have to use a pro rata calculation to convert a monthly rent into a weekly value. The method you must used is described in the Tenant Fees Act 2019.
For monthly tenancies, where the rent is paid every month, you can find the maximum deposit sizes pro rata by multiplying the monthly rent by 12 to get the annual rent. Then you divide by 52, the number of weeks in a year. This gives you the value of one week’s rent. You can then multiply this by the number of weeks in question.
(Monthly rent x 12) / 7 = pro rata weekly rent = maximum holding deposit size.
Multiple the weekly rent by five to get the maximum tenancy deposit size.
NB: the holding deposit must not exceed one week’s rent, and the tenancy deposit five weeks’ rent. Make sure you do not round up while calculating, or you may exceed the legal maximum by accident.
Finding out the maximum deposit size for a rented property
Just use OpenRent’s deposit calculator to find one and five week’s rent. We even round down for you, to make sure you don’t breach the Tenant Fees Act!
Enter your property’s monthly rental price. The calculator will show the maximum tenancy deposit that can be placed for the tenancy. Check out Rent Now to have all your landlord obligations handled automatically!