How to Calculate Rent on a Property

This article on “how to calculate rent on a property” is written to answer questions on how house rent is calculated in Nigeria.

House rent calculation depends on the tenure payable by a tenant. The tenure is the period that the rent paid would cover, for instance, weekly rent, monthly rent, bi-annual rent and annual rent. Some landlords collect daily rents (not applicable in all countries though).

To calculate rent for an accommodation (residential, commercial or industrial), the amount payable as rent must first be ascertained or agreed upon, at the point of agreement, the landlord and tenant would discuss the payment terms and the flexibility (if allowed).

To determine an annual rent, the landlord adds up the amount payable per month from comparable properties for example if the rent passing on similar properties is NGN 50,000.00 (Fifty Thousand Naira), the annual rent will be ascertained by multiplying the monthly rent passing (that is, N50,000.00) by the 12months of a year, which is N600,000.00 (Six Hundred Thousand Naira).

Illustration: N50,000 X 12months = N600,000.00

To calculate rent per month, the yearly rent (annual rent) is divided by 12 months. Assuming the yearly rent is N600,000.00. When the N600,000 is divided by 12 months, the monthly rent will be N50,000.00 (Fifty Thousand Naira).

How to Calculate Rent of a Property
Calculating rent for property

How do you calculate weekly rent to monthly?

Weekly rent can be calculated by dividing the monthly rent by the number of weeks in a month, most landlords divide the monthly rent by 4 days to arrive at the weekly rent. A good illustration is; N50,000 divided by 4weeks (N50,000/4 = N12,500). From the above illustration, if a monthly rent is N50,000.00 when divided by 4 weeks, the weekly rent comes to N12,500.00.

To bring the weekly rent to a monthly basis, the rent per week is multiplied by 4 weeks to arrive at the monthly rent of N50,000.00

How to calculate rent per day?

Rent per day is calculated by dividing the rent per month by the number of days in the month, for instance; N50,000 (monthly rent) divided by 30 days of the month which comes to N1,666.67, say N1,700.

How to Calculate Rent of a Property
Weighing the rent payable per month

When does rent start counting?

Rents start counting from the very first day the keys to an apartment are handed over to a tenant. The best starting period to commence rent count is January, if rents starts counting from January, the due date for rent renewal will be December of the same year. But if a tenancy period commences after January, the count will start from when the key was handed over to the tenant.

If the key to an apartment is handed to the tenant on the 1st of February 2023, the rent will expire in January of the following year, that is, the 31st of January 2024. If the rent starts counting on 1st March 2023, the rent will expire on 30th February 2024 (1st of March 2023 to 30th February 2024 makes 12 months which is a year).

However, for rents that start in-between months, the termination date will be counted in days within the due month. For example, if a rent starts counting on 24th January 2023, the expiration date will be 23rd January 2024 (the 23 days that weren’t used by the tenant will be added up in the last month). 24th of January 2023 to 23rd of January 2024 makes 12months which is 1year.

How to know whether you can afford a rent for an apartment

If you earn a monthly salary of N100,000.00 (One Hundred Thousand Naira), your rent should gulp up more than 3months salary (which is N300,000.00) to enable you save up (N900,000.00) for other personal and household demands. The moment your rent swallows more than 3 months salary, it may become difficult to cope with subsequent rental obligations especially if the annual rent is reviewed upwards from the previous amount. To calculate rent affordability use this formula;

Annual rent X 25% = rent payable

That is: N1,200,000.00 X 25/100

             N1,200,000.00 X 0.25 = N300,000.00 (25% salary set aside for rent)

Hence:  N1,200,000.00 – N300,000.00 = N900,000.00 (Amount saved)

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