Withholding rent

In very restricted circumstances, the tenant can withhold rent. However, there are significant risks involved in withholding rent and clients should be made aware of these before deciding to go ahead with this course of action.

Rent, or part of the rent, may be retained by the tenant if the landlord fails to adhere to her/his contractual obligations, for example by failing to keep the property wind and watertight. Withholding rent is also known as retention of rent and is based on the principle of mutuality of obligation in contract law.

This content applies to Scotland

Risks

Essentially, tenants must be advised of the significant risks and the possibility that they will lose their home before they decide to withhold rent. Withholding rent may be an appropriate course of action for some tenants but it must be an informed decision made in particular cases.

Repairs

If considering withholding rent due to disrepair private sector tenants should be aware that they may be better to make an application to the First Tier Tribunal Housing and Property Chamber.  The tribunal have the power to legally reduce the rent if the landlord does not carry out the repairs within a reasonable timescale. For further information please see the section on the Repairing standard.

Short assured tenants

In particular, withholding rent is a very high risk route for short assured tenants because:-

  • the landlord has the option to end the tenancy at the ish without having a particular reason for doing so, or

  • there may be a clause in the tenancy agreement stating that it can be terminated if the tenant has arrears for a particular period of time, typically three months. This type of clause is becoming increasingly common in tenancy agreements and it is important to look out for this and advise tenants accordingly.

  • Both short assured and assured tenants are more at risk from eviction action raised under ground 8 'three or more months rent due'. This is a mandatory ground and so the tenant would need to persuade a tribunal that the rent was not lawfully due. As a tenant can raise tribunal action to resolve problems with repairs this is likely to be less likely to be accepted.

Private residential tenants

Private residential tenants may also leave themselves open to risk where they withhold rent.

A landlord may raise action for rent arrears. Where the rent due is more than the equivalent of one months rent and the arrears have lasted three consecutive months, this is a mandatory ground. Again, the tribunal may be less than sympathetic if the arrears are the result of withheld rent unless the tenant has shown good reason why they have not applied to the tribunal to enforce the repairs.

Potential risk regarding subsequent homeless applications

Private tenants should be aware that if they withhold rent due to disrepair, and the landlord raises successful eviction action based on this, it might affect a subsequent homeless application.

In a case where the tenant had withheld rent and was evicted due to this it was held that the council were 'entitled to have regard to the tenants failure to utilise the Private Rented Housing Panel (now the First Tier Tribunal) when the explanation for not doing so made no sense.' The decision to find the tenant intentionally homeless was upheld. [1]

Procedure if rent being withheld

If withholding rent, the tenant should write to the landlord telling her/him that it is being with held and why, and deposit the rent in a special savings account clearly labelled as a rent account.

Failure to do these things may result in an action of eviction for rent arrears being raised by the landlord. If the 'retained' rent has not been saved then the tenant will have little defence.

It should be noted that if the landlord has failed to fulfil her/his obligations then there may be justification for an abatement of rent, for example, if one room in a house cannot be used by the tenant because it is too damp, then the rent may be proportionately reduced and the tenant may not be required to pay all of the retained rent when the landlord has fixed the dampness problem.

Again however the client must be fully advised of the risks above before they consider this course of action.

Last updated: 28 November 2017

Footnotes

  • [1]

    G v Stirling Council [2016] CSOH 121 2016 Hous. L. R. 64