What are quarter days? Office rental payments explained

Quarter Days are the four days of the calendar year when commercial leasehold payments – including office rent – are due.

I’ll explain exactly what has to be paid, when the payment has to be made – as well as why it has to be paid on these particular dates.

When do the four quarter days for office rent payment fall?

You might expect quarter days to be on regular dates in the calendar year but they aren’t! In fact they are on these dates:

• March 25th
• June 24th
• September 29th
• December 25th.

Why is office rent due on these irregular days?

Like many seemingly illogical aspects of modern life, the origins of quarter days are historical – based around Medieval religious festivals. Back in the Middle Ages, life in England very much revolved around the Church. Most people could not travel far from home, so they tended to remain close to where they lived. Life in feudal England revolved around work during the week, with Sundays as the rest day. And on your rest day, the Lord of the manor (M’Lord!) fully expected you to go to the Church that either he or his ancestors had built!

These four Christian festivals were scheduled roughly around the equinoxes and solstices that pre-date the Christian era:

1. Lady Day – The Feast of the Annunciation: March 25th (spring equinox)
2. Midsummer Day – The Feast of St. John the Baptist: June 24th (summer solstice)
3. Michaelmas Day – The Feast of St. Michael and All Angels; September 29th (autumn equinox)
4. Christmas Day – The Feast of the Nativity: December 25th (winter solstice)

Over time, these traditional quarter days assumed a significance beyond the religious. Each school term would start on a quarter day and workers would also be hired on these dates. Lady Day became the start of the new tax year and also the first day of the new rent year. Significantly all rents, debts and lawsuits were expected to be settled on quarter days to allow the following quarter to begin with a clean sheet.

So modern quarter days have their roots in the past. With the tradition never challenged down the years, commercial rent payments on modern leases are still paid on these dates.

Modern quarter days have their roots in the Middle Ages when rents, debts and lawsuits were expected to be settled on the 4 key religious festivals.

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(NB: These quarter days apply only to England. Scotland and Northern Ireland have a rather different system.)

Are payments for office service charges and business rates also due on quarter days?

Services Charges are due on quarter days along with the rent

Service charges pay for the communal costs incurred in running a building – eg receptionist, security, lifts, heating and cooling and other general items. The landlord or managing agent will make arrangements for all of these services and charge the tenants their fair share of the total cost. At the beginning of the service charge year, they will draw up an estimate of the expected annual costs. On each quarter day, they will charge each tenant a quarter of what they expect will be their bill for the whole year.

It’s worth pointing out at this stage that if the actual costs that make up the service charge are higher than the estimated costs, the landlord will bill you for the extra – either at the year end or when all the bills are in!

Business Rates are usually paid monthly – NOT on quarter days.

On the other hand, business rates function in an entirely different way. Business rates are paid to the the local authority (in much the same as Council Tax due on residential property). At the beginning of the rating year, your local authority will send you a bill for the year ahead. This will be accompanied by a monthly payment schedule for which you would likely set up a direct debit payment.

Service Charges – paid to the landlord to cover the communal costs incurred running an office building – are also due on quarter days. Business rates, however are collected by the local authority, usually monthly by direct debit.

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Is serviced office rent also due on a quarter day?

No – serviced office rent is usually paid monthly.

The quarter days system applies to a conventional office lease of between say 2 and 10 years. Instead of a lease, serviced offices have simpler, more flexible licences. Rent is usually paid monthly – based on your moving-in date – although some operators call for the rent on the first of each month.

It’s worth noting that the first payment to a serviced office operator is front-loaded. You tend to pay the equivalent to 3 months rent when you take the space: 1 month’s rent plus 2 extra months’ rent as a deposit. At the end of your tenancy, the operator will return your deposit, assuming of course that you don’t owe any money for reinstatement works – for example undoing any special layout that you requested at the outset. And that haven’t trashed the place!

Can I choose to pay rent monthly or set up my own quarter days on a conventional office lease?

Not really! We have had the odd occasion where this was agreed as part of a deal, but this is so rare, that the rule of thumb is: no you can’t choose your own quarter days!

How can I easily remember when the quarter days fall?

When I first started out in the property industry (so long ago!) This was of course one of the many important items I had to learn. I can clearly remember my boss (sitting behind a big desk in a big office with a cup of coffee; none for me) asking me if I knew when the quarter days fell.

“Sorry, no I don’t, I replied. He continued:

“How many letters in “March”? Five letters – so March 25th. How many letters in “June”? Four letters – so June 24th. How many letters in “September”? Nine letters – so September 29th.”

“And any fool knows when Christmas Day is!”

Counting the letters of the relevant months is a useful mnemonic that I use to this day!

Final Thoughts

So there we are. Seemingly random dates throughout the year – with a historical explanation. The landlord or managing agents will generate the bills using these dates. All you need to do is remember that they will arrive…and need paying!