Withholding Last Month's Rent

[Guest Fiddlesticks]

This seems to be a topic that comes up regularly. Some posters say that a tenant should never withhold the last month's rent in lieu of the deposit because the landlord could take the tenant to court.

I can see that withholding the money is clearly a breach of the lease. But to make the small claims action worthwhile the landlord would have to show some loss. Assuming the tenant pays any reasonable bills for damage, what has the landlord lost? Tuppence ha'penny in interest for a month.

It seems to me that withholding the payment is clearly the best course of action for any tenant, because no sane landlord would ever sue.

[MrShed]

I am not an expert in the courts. But, my guess is that the court would award him the full value of the rent, and the tenant would have to countersue or sue later for the deposit back. There can be no argument against the awarding of the rent, as quite obviously the landlord is due it - rent and damage deposit are completely seperate.

[Magpie]

I'm not an expert either, but I'm one of those who has recommended this. Maybe that's irresponsible of me. It's a calculated risk basically. If you make it clear that the landlord can take the deposit as a last months rent and also that you are perfectly willing to pay any reasonable costs for damages, then the main effect is to shift the balance of power when it comes to settling the damages issue. The money is in your account, not theirs. If landlords were generally trustworthy with respect to deposits there would be no need to even consider this, but we know from personal experience and from many reports here that landlords often keep the deposit on entirely spurious grounds.

I did this several times - the landlords huffed and puffed but didn't waste their time and money taking me to court. You might be unlucky and have a different experience. But on the other hand I don't see why, if there is no significant damage, the landlord would have a case - they've had all the money they're due and you've offered to pay for any damages so they aren't out of pocket. Small claims courts are a bit random but they are quite often run in a sensible way that takes such information into account. The landlord would only have a genuine grievance if there was damage for which they wanted to claim. In that case (and if you disputed their argument) they would have recourse to the small claims court to regain their money - putting them in the exact position you would be in if they nicked your deposit after you paid the last month.

So legally it's a risk as Mr Shed says, but as a gamble it may nonetheless be your best bet. Might create problems with references, and that's worth bearing in mind, though there are ways around that.

The other thing to take into account is that you may actually have a decent landlord. I had one or two who I respected and who were always reasonable with me, and I paid them the last months rent and trusted them with the deposit.

Edited January 7, 2006 by Magpie

[No6]

So legally it's a risk as Mr Shed says, but as a gamble it may nonetheless be your best bet. Might create problems with references, and that's worth bearing in mind, though there are ways around that.

The other thing to take into account is that you may actually have a decent landlord. I had one or two who I respected and who were always reasonable with me, and I paid them the last months rent and trusted them with the deposit.

These are good points. If you have had a good relationship with your landlord then it is not worth the hassle it may cause to withhold the rent just because you fear that you may not get your deposit back. A good reference if you are renting again, especially if you are going through an agent is important. Try to make sure that before you leave you go through things with your landlord, or the agent, and if there are any areas of disagreement that may lead to the deposit being withheld, they are dealt with beforehand if possible. That way if it goes to court, the fact that you have shown to be co-operative may work in your favour. All in all, my experience is that it is better to try and have a good relationship with your landlord/agents, that way you soon spot the bad ones and with luck, before you rent from them in the first place.

[Solvent Celt]

My understanding is that you are entitled to apply set off to any dealings. So the rent/dpost should cancel each other out - unless there actually is damage.

[newbie]

My understanding is that you are entitled to apply set off to any dealings. So the rent/dpost should cancel each other out - unless there actually is damage.

Every competently drafted lease (ie by landlord's lawyer) would have the tenant agree to pay rent "without set-off or deduction"

Edited January 12, 2006 by newbie

[Mr Crunch]

Every competently drafted lease (ie by landlord's lawyer) would have the tenant agree to pay rent "without set-off or deduction"

That clause would be an unfair term and unenforceable.

[Magpie]

That clause would be an unfair term and unenforceable.

And more to the point, "What can they do about it?".

They can take you to small claims court if they want the hassle and expenditure, but they probably won't and even if they do the fact that you have asked them to set this off and offered to cover any genuine damages will be taken into account regardless of the contract. The law on deposits is skewed against the tenant (unless you assume that all landlords are trustworthy...), and by withholding this you are moving the odds back slightly in your direction.

Edited January 12, 2006 by Magpie

[MrShed]

Every competently drafted lease (ie by landlord's lawyer) would have the tenant agree to pay rent "without set-off or deduction"

Get a new lawyer

[Mr Crunch]

The law on deposits is skewed against the tenant

I am not aware of this law!

[Guest Fiddlesticks]

This is all very well, but in practical terms if you do withhold the last month's rent there are three possibilities:

1) The landlord huffs and puffs, but you have left the flat in A1 condition and he accepts that. There is no possible deduction from the deposit, so it goes to pay the last month's rent and no-one is out of pocket (except the fourpence the landlord has lost in interest). No court is going to award anyone anything, and no sane landlord would bother trying. (If he is insane and sues, you counterclaim for your withheld deposit, you both swap cheqeues for equal amounts at the end, and justice is served. I doubt a judge would award the landlord any costs because he would regard the whole exercise as an utter waste of time).

2) There is damage which you agree to, and pay up for. Again no-one is out of pocket so no point litigating.

3) The landlord is a slippery one and bills you for things which you don't owe him for. You don't pay. He takes you to court. You would have ended up in court anyway (I hope) if you had been a good boy and paid the last month's rent but it would have been you suing him for unlawful deposit deductions. The landlord's claim for unpaid rent is no doubt a cast iron one - you do owe him one month's rent. However, he owes you your deposit for which you can counterclaim, and the onus is upon him to prove on the balance of probablilities that any damage which he is making deductions for is down to you. In other words you have the same argument that you would have had but it's up to the landlord to take the initiative and go to court rather than you trying to get a good address for service on him, fighting to enforce any judgment that you do get, etc - you're strategically in a much better position.

I accept that the reference issue might be more of a problem, but apart from that (and possibly just being a nice guy) I can still see no reason for paying the last month's rent.

Fiddlesticks

[deoraí]

Guys/girls

what are the consequences for references? What can they do to black ball you and Are you better off paying last remaining rent

[Matt Henson]

This seems to be a topic that comes up regularly. Some posters say that a tenant should never withhold the last month's rent in lieu of the deposit because the landlord could take the tenant to court.

I can see that withholding the money is clearly a breach of the lease. But to make the small claims action worthwhile the landlord would have to show some loss. Assuming the tenant pays any reasonable bills for damage, what has the landlord lost? Tuppence ha'penny in interest for a month.

It seems to me that withholding the payment is clearly the best course of action for any tenant, because no sane landlord would ever sue.

Provided you leave the property in tip top condition (remember you will have a LL that is looking to find fault) you should be able to walk away but it is unlikely you will get a good reference in your next place. I did this once because I had a nightmare LL and had moved in before the new TDS scheme was in force. In the end I offered to pay interest at 10% pa on the two months rent which worked out at about 40 quid and everybody was happy but it has caused me issues with two reference checks now.

In terms of the law, the LL can start evictions action you if you are 2 months in arrears (which is where they can claim costs) but in this case they can only use the small claims court and as you say they would have to prove actual loss (the small claims court does not consider consiquential loss) which as you say is a little interest.

Provided the deposit is held in the TDS scheme (AST's post April 2007) then there is no point in putting yourself and the LL through the stress of witholding rent, if not way up the balance between a bad reference and losing your money (i.e. does the LL have a reputaion). The final angle is if the AST is post 4/07 and not protected, in which case you can try and claim the 3x penalty for not protecting deposits.

The set-off thing is a red herring, one poster is right in saying that it always says in an AST that you can't, but it is un-enforceable, however it does not apply here, to use set-off correctly the LL must not be meeting their obligations under the 1985 LTA and you must have given them reasonable warning that you are going to use set-off.

In my view the law is much fairer now that the TDS scheme is in place

Edited November 10, 2009 by Matt Henson