Leases: no deduction, counterclaim or set-off

This note explains why a clause is required in a lease to exclude the tenant's equitable right to set-off a debt owed to it by the landlord against the rent the tenant owes to the landlord.

The note also explains the limitations on the landlord's ability to exclude the tenant's equitable right to set-off under the unfair terms in consumer contracts provisions of the Consumer Rights Act 2015. The ability to exclude the right will be further limited when section 152 of the Commonhold and Leasehold Reform Act 2002 comes into force, as this section will introduce a new statutory right for a tenant to withhold payment of service charges in certain circumstances.

Practical Law  Property understands that the government has no immediate plans to implement section 152.


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