Introduction
This article is written with reference to residential tenancies in England.
Withholding payment of rent is a common action taken by Tenants in a dispute against their landlords. Tenants often elect to withhold payment of rent with the justification that they are seeking to incentivise their landlord to comply with their obligations under the tenancy agreement. For example, a Tenant complaining of a faulty installation may elect to withhold rent until they believe the problem has been fixed. They may also seek to deduct money they allege to have spent in consequence of the landlord’s alleged non-performance of their obligations against any rent that falls due.
This article explores the potential consequences of withholding payment of rent and whether a landlord’s claim for possession against a Tenant who claims to be entitled to withhold their rent can still succeed.
The Law – possession on rent arrears grounds
Virtually all tenancy agreements contain a provision that the Tenant is obligated to pay their rent in specified periods and at a specified rate. They also almost always contain provisions that delayed payment of rent will attract interest at a rate set within the contract. Failure to pay rent pursuant to the given terms can give the Landlord grounds to seek an order for possession and money judgment for the outstanding arrears.
Where a secure Tenant is in arrears of rent, the landlord is entitled to claim possession of the premises under Ground 1, Schedule 2 of the Housing Act 1985. An order for possession may only be made in such circumstances if it is reasonable to do so: section 84(2)(a) Housing Act 1985.
Where an assured Tenant is in arrears of rent, the landlord is entitled to claim possession of the premises under Grounds 8, 10 and 11 of Schedule 2 of the Housing Act 1988. In terms of grounds 10 and 11, an order for possession may also only be made in such circumstances if it is reasonable to do so: section 7 (4) Housing Act 1988.
When is the risk worth taking?
There is no statutory provision or common law right enabling a Tenant to deliberately and persistently withhold payment of rent. However, a Tenant may have a defence to a rent arrears possession claim where they can satisfy the court of a set off and/or a counterclaim: see Haringey LBC v Stewart [1991] 6 WLUK 75].
Where a Tenant relies on such a set off and/or counterclaim but is unsuccessful, the Claimant Landlord is entitled to an order for possession. Where the court may only order possession in circumstances where it is reasonable to do so, it shall consider all relevant factors in its decision.
In normal circumstances, if a Tenant has taken steps to be able to pay the rent arrears if unsuccessful in their set off/counterclaim (including proposals for prompt payment) the court will not find it reasonable to grant possession. However, a Tenant in this position who has previously been persistently late paying rent may find that factor to outweigh the fact of why rent was withheld in the first place: Haringey LBC v Stewart per Waite J at 559.
Further, a Tenant who is evicted following a deliberate failure to pay rent may find that fact to prejudice any subsequent homelessness application they make with their local authority. This is because in such circumstances the local authority may find that they made themselves ‘intentionally homeless’ and that they owe no duty towards them: ss 190, 191 Housing Act 1996; R. v Nottingham City Council Ex p. Caine[1995] 10 WLUK 47].
Conclusions
Withholding payment of rent should be avoided but should otherwise be used as a last resort. If a Tenant does withhold their rent in response to their contention that the Landlord’s breaches of the tenancy agreement gave rise to damages that can be set off against the arrears, they have a complete defence if successful. However, Tenants should only seek to do this where they are certain of the following factors:
- they have good prospects of success in their set off and/or counterclaim;
- they have made arrangements to pay the outstanding arrears in the event that they are unsuccessful;
- they do not have a history of being persistently late paying rent.
Where the relationship between the Landlord and Tenant is still amicable, the parties should seek to reach agreement between them. For example, the parties could agree a deduction against future rent and agreement to complete repairs within a reasonable timeframe. Both Landlords and Tenants should seek legal advice prior to service/after receipt of a notice seeking possession on rent arrears grounds.
To enquire about instructing me in a Landlord and Tenant matter, please contact my clerk Bethany (bethanyroberts@lambchambers.co.uk).
Written by Blessing Mukosha Park.