Apportioning rent—the methods

The following Property practice note provides comprehensive and up to date legal information covering:

  • Apportioning rent—the methods
  • The three apportionment methods
  • Calendar year apportionment
  • Quarterly apportionment
  • The lease year method
  • The length of the quarter
  • Leap years
  • Should you work out what the seller keeps or what it hands over to the buyer?
  • Who is entitled to rent for the day of completion?
  • What if completion is late—is the apportionment adjusted?
  • More...

Apportioning rent—the methods

While this Practice Note primarily covers commercial property matters, it also touches on residential considerations.

Whenever a property is sold, outgoings and any income need to be split between the seller and buyer. When a new lease is granted, the rent for the part period between the commencement of the lease and the next rent payment day has to be calculated. When a lease comes to an early end (perhaps on the exercise of a break clause) the parties need to consider whether part of the advance rent should be refunded and if so, calculate the proper sum. (In such a case, the tenant is only entitled to a refund of rent where the lease contains express wording to that effect—Marks and Spencer v BNP Paribas. See Practice Note: Break clauses and notices—exercising breaks and conditions precedent) All of these situations involve apportionment.

When drafting an apportionment clause, especially on a multi-let property (eg an industrial park, a shopping centre, or a very large block of offices with many leases), check how the current managing agents' computer system calculates apportionments. Ideally, mirror this in the drafting as it can cause considerable delay and extra cost if the contract wording means that the rent apportionments cannot be worked out automatically.

There are three main ways to apportion rent. All involve spreading the payment evenly over

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