Set-off and deductions from rent
Set-off and deductions from rent

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

  • Set-off and deductions from rent
  • Common law and equitable right to set off
  • Exclusion of the right to set off
  • Unfair contract terms
  • Can a tenant set off a claim against a new landlord?
  • Landlord’s right to set off
  • Landlord’s alternative remedies for rent recovery
  • Service charges

This Practice Note considers set-off provisions in leases and whether a tenant can set off a claim against a new landlord after assignment. A tenant is entitled to set off liquidated claims for damages, at law, and unliquidated claims, in equity, for damages for breach of covenant by the landlord against rent accruing under the lease. In leases this right of set-off and deduction is usually excluded by express words. The Practice Note also considers whether or not a tenant is entitled to withhold rent or service charge in the event of a landlord’s breach of lease.

A tenant is entitled:

  1. in certain circumstances at law to set off liquidated, and

  2. in equity to set off, including unliquidated

claims for damages for breach of covenant by the landlord against rent accruing under the lease.

However, the right to set off is usually excluded by express words. It is particularly important to use clear wording when excluding this right to rebut the presumption that neither party intends to abandon any remedies for breach which arise by operation of law.

Common law and equitable right to set off

There is no general right at common law to set off. The tenant’s covenants and the landlord’s covenants are independent of each other and so, generally, a tenant cannot withhold rent against the landlord’s default. Also, the landlord may be able to

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