Rent Quarter Days Explained - Payments, Leases Advance, & Calculations (2024)

Not only can this be confusing in the way that you calculate or apportion these monies, but you can also be dealing with much more significant sums of rent or other, say, service charge monies due for the next three months.

So, for example, the total money due in a year may be easily understood – for example, £12,000 each year. But then the lease may go onto how, or more importantly when, this is paid - often on ‘quarter days’.

So, the above example means paying £3,000 four times a year, which then totals £12,000 for the whole year.

Now, this is a large amount of money, rather than, for example, only £1,000 every month - and to make matters worse, this is often in advance and not in arrears. Big potential problems for tenants who need to fork the bill, but great news for the landlord receiving this.

And it’s the landlords that these benefit, as they’re getting more money up-front and therefore offers good security. Again, it may not sound fair, but as this is the norm for commercial property leases, deviating back to an ‘easier’ method later for a tenant is a real plus point.

This can cause real cash flow issues if this isn’t understood from day one. Okay, the actual amounts will end up being the same. Still, any business owner will know how important it is only to need to pay £1000 at a time rather than £3000, mainly when this is for future liabilities that you have not earned any income back from yet.

Whilst this is usual for the main rent, watch out for other charges being on the same basis, for example, service charge and any initial recharge.

Or even worse, the insurance premium on an annual-in-advance basis.

(Oh yes, and completely separate concerning a tenant’s other outgoings, any business rates are generated on an annual basis as well, however dialogue with the local billing authority will often allow monthly payments).

When looking at when these are, the majority are on set dates prescribed in the year, often referred to as standard normal or legal ‘quarter days’. Or from another perspective, ‘quarterly in advance’ payment of due monies.

Sometimes these can be stated as different dates, but usually are meant as the traditional UK and England rent quarter days of 25th December, 25 March, 24 June, and 29 September. These may seem a little random, but that’s how it has evolved over time.

On a practical note, one way you can remember these English rent quarter days is to first recognise the first one as Christmas day, and then the day in each of the other months being the same as the number of letters in that month to 20. Therefore:

· Christmas day is the first one – 25 December
· March has 5 letters, so 20 + 5 is – 25 March
· June has 4 letters, so 20 + 4 is – 24 June
· September has 9 letters, so 20 + 9 is – 29 September

To try and get with the times, you can see reference to ‘modern’ or 'new English' quarter days, which take the 1st of the proceeding month of each standard quarter day to try and round things up nicely, therefore:

· 1st January for just after the December quarter day (Christmas day)
· 1st April for just after the March quarter day
· 1st July for just after the June quarter day
· 1st October just after the September quarter day

Whichever quarterly method you’re using, the actual amount within each quarter is assumed to be the same even though the dates are slightly different each month (particularly with traditional quarter days).

So, the literal number of days between the 24th June and the 28th September is more than the 25th March to the 23rd June. But the quarter chunks of money are the same each time.

However, watch out for the beginning and ends of these periods, either at the start or end of the lease, or any mid-term changes like break clauses (plus, whether you should be even charging rent for a contracted-out lease).

Taking a step back, it’s worth seeing what other options are available from either a landlord’s or tenant’s perspective to try and make things a little easier.

One option is to simply agree on a monthly rather than the usual quarter-day basis anyway, ideally the 1st of each month in advance. Okay, it may not be the norm, but something is better than nothing for a struggling tenant in, say, post-Covid-19 times.

A landlord may agree to receive monthly payments on a similar line but keep the charges as quarterly in the lease.

Also, watch out for the actual total rent figure changing and, therefore, the quarterly amounts, such asrent review adjustments, ITZA calculations for retail properties, and new rents from asset management techniques.

The final point is to be clear on how these payments should be made no matter what the dates are, right from interest charges to recovery-action if they are late or not paid such as with CRAR, and even down to stating in the lease how they should be paid, for example by regular standing order.

Although it’s very beneficial for a landlord to have so much money paid in advance every three months, it is the norm for standard commercial leases.

Therefore, make sure the cash-flow issues and timing are fully accounted for, or you could come up with a cropper.

However, don’t forget that there can be ways to get around this, which can also benefit a landlord. The most critical time is when a lease is first granted, and there is an opportunity to state another payment basis. However, even afterwards, there are still opportunities for change.