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alidee
25-01-2009, 11:13 AM
Had a tenant who was on an AST from 8th September 2008 to 7th December 2008.
She left on 24th January 2009 by mutual agreement with the landlord. She had however paid her rent in advance until 7th February 2009.
I have refunded the rent due to her but she has queried it. Could you guys be good enough to tell me how much you think it should have been?:)
She paid £365pcm.
Many thanks for any replies.
Alidee

Preston
25-01-2009, 11:44 AM
Had a tenant who was on an AST from 8th September 2008 to 7th December 2008.
She left on 24th January 2009 by mutual agreement with the landlord. She had however paid her rent in advance until 7th February 2009.
I have refunded the rent due to her but she has queried it. Could you guys be good enough to tell me how much you think it should have been?:)
She paid £365pcm.
Many thanks for any replies.
Alidee

Hi,

The short answer is that it depends on what was agreed between her and the landlord. Strictly speaking, if the rent is payable in advance, the landlord need not have agreed to refund any of the rent - although I accept it may have been necessary to do so in order to negotiate a surrender and/or that it may also be fair to do so.

So, if the point of your question is that there is some dispute over how to apportion days, you could always refer back to the above.

Anyway, I would probably do it on the basis 7 31ths (for January) and 7 28ths (for February). I know some agents would go for 14 365ths of the annual equivalent rent, for simplicity, but this can sometimes give some slighly perverse results. Either way, though, the difference is pretty marginal.


Preston

alidee
25-01-2009, 11:57 AM
Hi Preston
Thanks for your answer - basically the LL needed the room back and she originally agreed to move out at end of January and then asked to move out a week early which was fine. LL also agreed that he would refund any rent overpaid as he was glad to get the room back.
Hope my ramblings make sense. :)
The way I worked it out was - she paid £365 in advance to 7th Feb.
She should have paid - 8/1/09 - 24/01/09 which is £204 (17 days at £12).
So I then took £204 from £365 she did pay which came to £161.
Is this correct ?
Thanks
Alidee

jeffrey
25-01-2009, 14:20 PM
Hi Preston
Thanks for your answer - basically the LL needed the room back and she originally agreed to move out at end of January and then asked to move out a week early which was fine. LL also agreed that he would refund any rent overpaid as he was glad to get the room back.
Hope my ramblings make sense. :)
The way I worked it out was - she paid £365 in advance to 7th Feb.
She should have paid - 8/1/09 - 24/01/09 which is £204 (17 days at £12).
So I then took £204 from £365 she did pay which came to £161.
Is this correct?
All previous answers are wrong. This is how to do it correctly.
Rent = £365 per month.
So rent = £4380 per year= £12 per day.
T paid in full to 7 Feb.
T left on 24 Jan.
L owes T for 25 Jan. - 7 Feb. = 13 days = £156.

ALWAYS use annual basis. All rents accrue from day to day. See s.2 of Apportionment Act 1870 (below)!

Rents, &c. to accrue from day to day and be apportionable in respect of time

All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.

Preston
25-01-2009, 15:10 PM
All previous answers are wrong. This is how to do it correctly.
Rent = £365 per month.
So rent = £4380 per year= £12 per day.
T paid in full to 7 Feb.
T left on 24 Jan.
L owes T for 25 Jan. - 7 Feb. = 13 days = £156.

ALWAYS use annual basis. All rents accrue from day to day. See s.2 of Apportionment Act 1870 (below)!

Rents, &c. to accrue from day to day and be apportionable in respect of time

All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.

Hi

I thought the Apportionment Act only applies to rent due in arrears (Elis V Rowbotham)? The rent in this case is due in advance and, therefore, is not capable of apportionment under that statute; rather, the apportionment would be by way of negotiation and should ideally have been settled before the surrender was accepted.

(Having said this, the explanation of apportionment in my note - 7/31sts etc - looks like a load of nonsense. I forgot the question was about a refund whereas my answer relates to the calculation of daily occupancy rates so I will try to explain it more clearly in future.)

I think Alidee's suggestion is fine.

Preston

jeffrey
25-01-2009, 15:27 PM
Hi

I thought the Apportionment Act only applies to rent due in arrears (Elis V Rowbotham)? The rent in this case is due in advance and, therefore, is not capable of apportionment under that statute; rather, the apportionment would be by way of negotiation and should ideally have been settled before the surrender was accepted.

(Having said this, the explanation of apportionment in my note - 7/31sts etc - looks like a load of nonsense. I forgot the question was about a refund whereas my answer relates to the calculation of daily occupancy rates so I will try to explain it more clearly in future.)

I think Alidee's suggestion is fine.
Well, the Act does not make clear whether it applies only to rent in arrears. It does provide a fair way to calculate in both cases. Moreover, could one reasonably argue that T leaving earlier than date to which rent paid in advance should always have to write-off the surplus?

mind the gap
25-01-2009, 15:31 PM
Moreover, could one reasonably argue that T leaving earlier than date to which rent paid in advance should always have to write-off the surplus?


Well, one could - but as Preston has pointed out (#2), presumably this refund was an agreed condition of the surrender in this case.

Preston
25-01-2009, 15:34 PM
Well, the Act does not make clear whether it applies only to rent in arrears. It does provide a fair way to calculate in both cases. Moreover, could one reasonably argue that T leaving earlier than date to which rent paid in advance should always have to write-off the surplus?

Hi

I agree, but the decision in Elis v Rowbotham seems quite clear and is certainly treated as good law in my working experience.

On your second point, it may not be reasonable, but again I think it is clear in law that rent paid in advance need not be apportioned so it is always advisable for a tenant wishing to surrender to agree the terms with the landlord, including how rent paid in advance is to be treated.

Preston

alidee
25-01-2009, 15:37 PM
Yes the landlord is fine about giving a refund as it was mutually agreed with tenant that he would give her a months notice to leave but if she needed to leave earlier than this that would also be fine and she would be given a rent refund.He wanted the room back asap through no fault of the tenants.
It doesn't seem as though there is a straightforward answer so I'm glad i asked the question- thought I was just being a bit dippy :D
Alidee

alidee
25-01-2009, 15:44 PM
[QUOTE=jeffrey;114148]All previous answers are wrong. This is how to do it correctly.
Rent = £365 per month.
So rent = £4380 per year= £12 per day.
T paid in full to 7 Feb.
T left on 24 Jan.
L owes T for 25 Jan. - 7 Feb. = 13 days = £156.

Hi, should this be 14 days not 13 ? Are not both the 25th and 7th included in this calculation?
Alidee

jeffrey
25-01-2009, 15:49 PM
I agree, but the decision in Elis v Rowbotham seems quite clear and is certainly treated as good law in my working experience.

On your second point, it may not be reasonable, but again I think it is clear in law that rent paid in advance need not be apportioned so it is always advisable for a tenant wishing to surrender to agree the terms with the landlord, including how rent paid in advance is to be treated.
Do you have a citation for the case report, please?

Preston
25-01-2009, 15:57 PM
Do you have a citation for the case report, please?

Ellis v Rowbotham [1900] 1 QB 740

jeffrey
25-01-2009, 16:16 PM
Ellis v Rowbotham [1900] 1 QB 740
Aha, ELLIS not ELIS! Found it.

alidee
25-01-2009, 19:59 PM
So is the consensus that my sums were correct ? Just need to ask as I will need to contact the ex tenant tomorrow :confused:
Many thanks

Preston
25-01-2009, 20:25 PM
So is the consensus that my sums were correct ? Just need to ask as I will need to contact the ex tenant tomorrow :confused:
Many thanks

Hi

My view is that the method you have chosen is both acceptable and commonplace, notwithstanding that there are other ways it could have been done.

My argument is that statute doesn't give us an answer, so ideally this needs to be negotiated as part of the surrender or, failing that, you need to behave reasonably. I think you are doing so.

Preston

mind the gap
25-01-2009, 20:42 PM
Not to put a spanner in Jeffreys calculations, but there are more than 365 days per year - 365.25 taking into account leap years. Only 1p a day difference in this case but it adds up!

At this point, Alidee starts to bang her/his head against the nearest wall and gibber, wishing s/he'd never asked the bloody question in the first place...!

Don't worry. Alidee. Just give them what you think. (I'd ask why your T was disputing the amount exactly, but I don't want to send you completely over the edge. Sleep well).

alidee
25-01-2009, 21:26 PM
Blimey you lot have just put a smile on my face :D
She is disputing the number of days I have paid her which I don't have a problem explaining. I could just see her then moving on to ask how I worked it out so thought I would get it clear in my head - think I have now so thanks everyone.
Alidee