Choose how you would like Rent Review Adjustments to be calculated. Either select from an **Annual** or **Monthly** calculation method, for how you would like adjustments calculated should your review date fall outside of the payment cycle of your tenant.

Note: there is also a "Calculation example" where you can enter different amounts for both methods to be sure you are using the correct one.

**Annual method: (Default setting)**

The daily rate is calculated annually, i.e. annual rate divided by 365. The amount is then multiplied by the number of days charged to arrive at the total rent amount.

**How does the Annual method work?**

For example, if the normal rent cycle is the 1st to the last day of each month, the Annual rent is $40,000 and a Rent Review occurs on the 20th of April, 10 days before the next usual payment cycle. The Rent Review is set to increase the Annual rent to $45,000.

The calculation would be as follows:

- Current Rent Amount calculated for the period - 01 April to 19 April:
- Daily Rent = $40,000 / 365 = $ 109.59
- Pro-rata amount = $ 109.59 x 19(days) = $2,082.21

- New Rent amount calculated for the period - 20 April to 30 April:
- Daily Rent = $45,000 / 365 = $ 123.29
- Pro-rata amount = $ 123.29 x 11 (days) = $1,356.19

The tenant will receive two amounts to pay one on the old rate of $ 2,082.21 for the 19 days pre-Rent Review and for the new rate of $ 1,356.19 for the 11 days post-Rent Review.

**Monthly method:**

The daily rate is calculated monthly, i.e. annual rate divided by 12, then divided by the days in the month(s). The amount is then multiplied by the number of days charged to arrive at the total rent amount.

**How does the Monthly method work?**

For example, if the normal rent cycle is the 1st to the last day of each month, the Annual rent is $40,000 and a Rent Review occurs on the 20th of April, 10 days before the next usual payment cycle. The Rent Review is set to increase the Annual rent to $45,000. **Note** April has 30 days.

The calculation would be as follows:

- Current Rent Amount calculated for the period - 01 April to 19 April:
- Daily Rent = $40,000 / 12 / 30(days in April) = $ 111.11
- Pro-rata amount = $ 111.11 x 19(days) = $2,111.09

- New Rent amount calculated for the period - 20 April to 30 April:
- Daily Rent = $45,000 / 12 / 30(days in April) = $ 125.00
- Pro-rata amount = $ 125.00 x 11 (days) = $1,375.00

The tenant will receive two amounts to pay one on the old rate of $ 2,111.09 for the 19 days pre-Rent Review and for the new rate of $ 1,375.00 for the 11 days post-Rent Review.

**Getting there:**

Settings > Manage Companies > Choose a Company > Invoicing drop-down > **Default Rent Review Calculation Method**