Set-Off as a Defence to Rent Arrears: From Lee-Parker to Televantos

Last reviewed: 11 May 2026 — England and Wales

General information only. This article describes the law in England and Wales as at the date shown above. It is not legal advice and is not a substitute for advice on your case. For free regulated advice, contact a Law Centre, Citizens Advice, Shelter England, or the Housing Loss Prevention Advice Service available at every County Court.

Quick Answer

Equitable set-off allows a tenant to reduce or extinguish a rent-arrears claim by setting off unpaid damages for the landlord's breach of repairing covenant. The doctrine has been settled since Lee-Parker v Izzet [1971] 1 WLR 1688, extended through British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137, and reaffirmed by the Court of Appeal in Televantos v McCulloch (1990) 23 HLR 412, the modern authority cited by Shelter Legal England on set-off in possession proceedings (england.shelter.org.uk, retrieved 2026-05-11). Set-off can defeat Ground 8 absolutely if it brings the arrears below the three-month statutory threshold. The Renters' Rights Act 2025 has not weakened the doctrine — if anything, the wider repairing duties being phased in (the Decent Homes Standard and the PRS extension of Awaab's Law) will make set-off easier to plead once the relevant regulations are in force.

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Why Set-Off Matters in 2026

For a tenant facing a Section 8 possession claim on Ground 8 (three months' rent arrears), set-off is often the single most important defence available. If the property has been in serious disrepair, the tenant's damages claim for breach of the landlord's repairing covenant can be set against the rent. If the set-off brings the arrears below three months on the date of the hearing, Ground 8 disappears as a mandatory ground — and the court has no discretion to grant possession on it.

For the landlord, the picture is the inverse. A pristine rent ledger does not save you from a disrepair counterclaim that has been simmering for two years. The longer you have ignored a tenant's repair complaints, the bigger the set-off they can run when you finally take possession action.

The Garden Court Chambers webinar in September 2025 made this point explicitly: with the Renters' Rights Act tightening every other procedural route, set-off is now the most consistently winnable tenant defence in possession proceedings (gardencourtchambers.co.uk, retrieved 2026-05-11).

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The Doctrine in Three Cases

Lee-Parker v Izzet [1971] 1 WLR 1688

The foundational authority. The Court held that where a landlord is in breach of an express or implied repairing covenant, the tenant can withhold rent up to the cost of remedying the breach. The withheld sum is, in effect, a set-off against future rent. This is not a self-help eviction — the tenant has to be able to prove the breach, the cost, and the legitimacy of the deduction.

The case settled three things:

1. The tenant does not need a court order to deduct.
2. The deduction has to relate to a genuine breach by the landlord.
3. The tenant remains liable for any balance after the set-off.

British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137

This is the case that extended the doctrine into the wider set-off framework. Forbes J held that a tenant can set off damages for breach of the landlord's covenant against any rent claim — past, present or future. The cause of action does not have to mirror the rent claim; it just has to arise from the same underlying contract.

The case also confirmed that the set-off operates as a defence, not merely as a counterclaim. This matters in possession proceedings, where the court is asked whether arrears existed on the date of the hearing. Set-off goes to the figure itself, not just to the relief.

Televantos v McCulloch (1990) 23 HLR 412, CA

The Court of Appeal authority cited by Shelter Legal England as the modern reference point for set-off in possession proceedings (england.shelter.org.uk, retrieved 2026-05-11). The case confirms that equitable set-off remains available as a defence to a possession claim founded on rent arrears and that a properly pleaded set-off can defeat a Ground 8 claim by bringing the arrears below the statutory threshold. The Court of Appeal emphasised that the tenant has to plead the set-off with particularity — vague allegations of disrepair will not do.

Televantos is the touchstone modern authority. If you are running set-off in 2026, you cite it. The historic chain remains Lee-Parker → British Anzani → Televantos.

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What Set-Off Actually Requires

A successful set-off claim has four elements:

1. A breach of the landlord's repairing covenant. Section 11 of the Landlord and Tenant Act 1985 imposes the standard implied covenant. Express covenants in the tenancy agreement may be broader. Awaab's Law adds procedural duties to investigate and remediate hazards on prescribed timescales; the Decent Homes Standard adds substantive criteria covering thermal comfort, modern facilities and reasonable repair — both extended to the PRS by the Renters' Rights Act 2025 and being phased in through secondary legislation.
2. Notice of the disrepair to the landlord. The duty to repair under Section 11 is generally triggered by notice. The tenant has to be able to show they raised the problem and gave the landlord a reasonable period to fix it.
3. Quantifiable damages. The set-off has to be a real figure. The tenant can claim general damages (loss of amenity) and special damages (damaged possessions, increased fuel bills, alternative accommodation costs). The general-damages quantum is normally calculated by reference to a percentage of the rent during the period of disrepair — Wallace v Manchester City Council [1998] EWCA Civ 1166 sets out the framework.
4. Adequate pleading. The set-off has to be pleaded in the defence (Form N11) with the breach, the notice, the damages, and the calculation set out. Televantos is explicit that a generic "set-off against any rent arrears" pleading will not survive a strike-out application.

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How Each Side Should Approach It

The Tenant

Run the set-off if the facts are there. Do not run it if they are not.

• Document the disrepair before the claim is issued. Photographs (with date stamps), videos, surveyor reports, Environmental Health reports, GP letters if mould has affected health. Build the file as the disrepair develops, not in the panicked week before the hearing.
• Notify the landlord in writing. A WhatsApp message will do. An email is better. A signed letter sent by recorded delivery is best.
• Use the Pre-Action Protocol for Housing Conditions. Even if you are running set-off as a defence rather than a free-standing claim, the Protocol-compliant letter creates a documentary record of the issues, the request, and the landlord's response.
• Calculate the set-off realistically. Wallace v Manchester general damages typically run at 25–50% of the rent for the period of disrepair, occasionally more for severe cases (mould affecting child health, sewage backups, total loss of hot water for weeks). Add special damages for documented out-of-pocket costs.
• Plead the set-off with particularity. Date of breach, date of notice, period of disrepair, basis of calculation, total set-off figure. Attach the supporting evidence to the defence.
• Cross-link to a counterclaim. If the set-off exceeds the rent arrears, the balance becomes a counterclaim. The court can give judgment for the tenant on the counterclaim while dismissing the possession claim.

The Landlord

If you are about to issue a Section 8 claim on Ground 8, do a clean-conscience audit of the property first:

• Get the property surveyed. An RICS surveyor's report on current condition costs £400–£600 and saves £4,000–£6,000 in lost litigation.
• Pull the repair log. Every request the tenant made; every response you gave; every contractor visit. Be honest with yourself about whether any of those requests were ignored or delayed.
• Look at Awaab's Law timescales. Awaab's Law is being extended to the private rented sector by the Renters' Rights Act 2025, with the PRS-specific timescales expected to mirror the social-sector regulations (broadly 14 days to investigate a reported hazard, 7 days for emergency works) — final PRS regulations are being phased in through 2026. If you missed the equivalent deadlines, the tenant has a strong set-off case.
• Consider settling. A landlord who pursues a Ground 8 claim against a tenant with a credible set-off can lose the claim and pay damages on the counterclaim. The headline arrears figure can become an actual debt owed to the tenant.

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The Bundle Both Sides Will Build

The bundle for a possession claim with a set-off counterclaim is substantially larger than a simple arrears bundle. It will include:

Landlord's evidence:

• Tenancy agreement
• Form 3A
• Rent ledger from start of tenancy
• Bank statements supporting the ledger
• Repair-request log
• Contractor invoices
• Gas safety certificates
• EPC
• Deposit protection paperwork
• Landlord witness statement

Tenant's evidence:

• Dated photographs and videos of disrepair
• Pre-Action Protocol for Housing Conditions letter
• Landlord's response (or absence of response)
• Surveyor's report if obtained
• Environmental Health report if obtained
• GP letters or medical evidence if health impact
• Receipts for damaged possessions
• Bills showing increased fuel costs
• Witness statements from family members or visitors
• Schedule of Loss
• Tenant witness statement

BundleCreator's templates for housing-possession-debt include the integrated possession-and-counterclaim bundle index, which lists all of the above with the right PD27A section labels.

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How the Numbers Play Out

A worked example. Tenancy at £1,200 per month. Arrears of £4,000 (over three months on a month basis, just above the Ground 8 threshold). The tenant has lived with serious mould in two rooms for 18 months. The landlord did nothing for 12 of those months and partially remediated in the last six.

The set-off calculation runs something like:

• Wallace v Manchester general damages: 35% of rent for 18 months = 35% × £1,200 × 18 = £7,560
• Special damages: replacement bedding and clothing affected by mould = £600
• Total set-off: £8,160

The arrears of £4,000 are wiped out. The tenant has a counterclaim balance of £4,160. Ground 8 disappears (no arrears at hearing). Grounds 10 and 11 might still be argued by the landlord, but the discretionary nature of those grounds makes possession unlikely on facts like these.

For the landlord, the outcome is: possession claim dismissed, judgment for the tenant on the counterclaim in the sum of £4,160, costs against the landlord. The economic case for pursuing Ground 8 against a tenant with a credible set-off rarely survives this analysis.

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The 2026 Currency Check

The doctrine is unchanged by the Renters' Rights Act 2025. Televantos remains the leading modern authority. The substantive scope of the landlord's repairing obligations has expanded — Section 11 still applies; the Homes (Fitness for Human Habitation) Act 2018 applies; the Decent Homes Standard is being extended to the PRS; Awaab's Law procedural duties are being extended to the PRS through secondary legislation phased through 2026.

The wider scope means the underlying damages claim is bigger. The set-off, calculated against a larger damages figure, defeats a larger range of arrears claims.

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A Note on the Pleading Standard

The single most common reason set-off claims fail in possession proceedings is poor pleading. Televantos requires:

• The specific breach (which covenant, what failure, when)
• The specific notice (when, how, evidence)
• The specific damages (period, calculation, supporting evidence)
• The specific set-off figure

A defence that says "the property has been in disrepair and the tenant relies on a set-off" without more is liable to be struck out. The judge needs to see the figures. The District Judge at a Wednesday morning possession list does not have time to do the arithmetic from raw photographs.

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BundleCreator's set-off defence templates for the Housing Possession & Tenant Debt area at /housing-possession-debt include the integrated N11 defence with counterclaim particulars, the Schedule of Loss, and the supporting witness statement, all PD27A-aligned for the bundle.

Nothing in this article is legal advice or a substitute for it. The information here describes the law as it stands at the date shown; the law and procedure may change. For free regulated advice, contact Citizens Advice, Shelter England, your local Law Centre, or the Housing Loss Prevention Advice Service (which is available without charge to any tenant served a Section 8 notice).