Equitable set-off and disrepair counterclaim: the tenant defence to Ground 8 possession (2026)

Ground 8 is the single most aggressive ground in Schedule 2. It is mandatory: if the landlord proves the threshold, the judge has no discretion and must order possession. There is no reasonableness test, no Article 8 overlay applied at first instance, and no second hurdle. For tenants in arrears, Ground 8 is the ground that feels closed at the door.

But the door has a hinge. The threshold is measured against the rent lawfully due, not against the figure the landlord puts in the notice and the particulars of claim. And where the landlord is in breach of repairing obligations, the tenant has an equitable set-off — established in Baygreen Properties v Gil and consistently applied since — that reduces the rent lawfully due by the value of the cross-claim. Calculated correctly, set-off can bring the rent lawfully due below the Ground 8 threshold at the notice date or the hearing date, and the mandatory ground then fails as a matter of law.

This walkthrough is for a tenant who has received a Section 8 notice citing Ground 8, who has — or believes they may have — a disrepair claim against the landlord. It covers what equitable set-off is, the Baygreen test, the connected-cross-claim requirement, the lawfully-due calculation at the two relevant dates, the procedural filing order for the N11R defence and counterclaim, the disrepair quantum methodology, and a templated set-off and counterclaim defence paragraph for the N11R.

This is distinct from the 2026-05-09 walkthrough on disrepair-to-rent-reduction maths, which targeted the tribunal-route rent reduction. This piece is about the set-off-against-arrears defence in the possession claim itself — a different procedural mechanism that defeats the mandatory threshold rather than reducing the contractual rent going forward.

What equitable set-off actually is

Equitable set-off is a doctrine of the common law that allows two cross-claims, where connected, to be netted off against each other. The amount due on the larger claim is reduced by the amount of the smaller claim. It operates at law without the need for a court order — though where the matter goes to court, the judge applies the set-off in determining what is owed.

In a rent-and-disrepair context, the set-off works as follows. The landlord claims arrears of rent. The tenant has a cross-claim for damages for disrepair (typically calculated as a percentage reduction of contractual rent for the period of the disrepair). The two cross-claims arise from the same tenancy agreement — they are connected. Equitable set-off allows the tenant to assert that the rent lawfully due is the contractual rent minus the disrepair damages. Where the disrepair damages exceed the contractual rent for a period, the rent for that period is reduced to zero (set-off does not produce a balance owing the other way unless the counterclaim quantum is independently established).

The key requirements are: (a) a connected cross-claim (single contract or sufficiently close connection), (b) an arguable breach by the landlord, and (c) a quantum methodology the court can apply. Where all three are met, the set-off operates.

The Baygreen Properties test

The leading authority is Baygreen Properties Ltd v Gil. The Court of Appeal held that the rent lawfully due from a tenant, for the purposes of Ground 8, is the rent after deduction of the amount of any equitable set-off arising from a landlord's breach of repairing obligations. Where the tenant asserts an arguable breach, the court must investigate the cross-claim and apply set-off in determining whether the Ground 8 mandatory threshold was crossed.

The principle has been applied consistently since. It does not require the tenant to have proved the cross-claim before the hearing; it requires the cross-claim to be arguable and properly particularised. The court will investigate it as part of the possession claim. If, on investigation, the cross-claim is made out and the quantum is sufficient to bring the rent lawfully due below the threshold at the notice date or the hearing date, the Ground 8 case fails and the judge must refuse possession on that ground.

The Renters' Rights Act 2025 did not change the Ground 8 threshold or the lawfully-due test. Baygreen continues to apply with full force.

The connected cross-claim requirement

For set-off to operate, the cross-claims must be connected. In a tenancy context, this is straightforward:

• Rent vs disrepair under section 11 of the Landlord and Tenant Act 1985 (the statutory implied repairing covenant for the structure and exterior, plus the installations for the supply of water, gas, electricity, sanitation, and space heating) — connected.
• Rent vs disrepair under section 9A of the Landlord and Tenant Act 1985 (the implied fitness-for-human-habitation obligation, in force from 20 March 2019 for new tenancies and 20 March 2020 for existing) — connected.
• Rent vs disrepair under express maintenance terms in the agreement — connected.
• Rent vs breach of the covenant for quiet enjoyment — connected, though the quantum methodology differs.
• Rent vs Awaab's Law obligations under section 10A of the Landlord and Tenant Act 1985 (in force for private rentals from 27 October 2025 by virtue of the Renters' Rights Act 2025) — connected.
• Rent vs a personal injury claim unrelated to the tenancy — not connected. The personal injury claim would have to be pursued as a separate counterclaim, not by set-off.

The connection requirement is rarely contested where disrepair is the cross-claim. The vast majority of Ground 8 defences relying on set-off do so on the basis of a disrepair cross-claim, and the connected nature is treated as a settled point.

The lawfully due calculation at two dates

Ground 8 has two threshold dates the court tests against. The mandatory ground requires the rent lawfully due to be at or above the threshold at both of:

• The date the notice (Form 6A) was served.
• The date of the hearing.

The strategic implication is significant. If equitable set-off reduces the rent lawfully due below the threshold at either date, the mandatory ground fails. The defence can therefore choose which date to attack — usually the date the notice was served, because the set-off quantum is calculated at that date and the disrepair history up to that date is documented.

The two-date test also matters where the tenant has reduced arrears between the notice and the hearing — for example by drawing on savings, family support, or a Universal Credit managed payment to the landlord. If the rent lawfully due at the hearing date is below the threshold, the mandatory ground fails regardless of the notice-date position.

The set-off and the arrears reduction can be combined. A tenant who has reduced arrears by half between the notice and the hearing, and who has a set-off worth a third of the contractual rent for the period of disrepair, is well-positioned to bring the lawfully due rent below the threshold at the hearing date even if the notice-date position was tight.

The procedural filing order

On receiving the N5 possession claim with the attached particulars of claim, the tenant has 14 days to file form N11R (the defence and counterclaim form for residential possession). The structure of the filing matters:

• The defence section. Address each paragraph of the particulars. Plead the equitable set-off as a substantive defence to Ground 8, citing Baygreen. State the quantum of set-off claimed. Calculate the rent lawfully due after set-off at the notice date and the hearing date. If the result is below the threshold, state that the Ground 8 case fails as a matter of law.
• The counterclaim section. Plead the same disrepair as a counterclaim for damages and (where appropriate) an order for specific performance of the repairing obligation. Attach a particulars-of-disrepair schedule with photographs and the notice trail. Plead the quantum methodology.
• Filing. File the N11R at the court that issued the possession claim, with a copy to the landlord's solicitors (or to the landlord directly if unrepresented). Keep proof of filing.
• Fee. A fee may be payable on the counterclaim. Apply for fee remission using form EX160 if you qualify on means — the EX160 process is straightforward and most low-income tenants qualify.

The procedural filing order matters because the defence and the counterclaim work together. The defence defeats Ground 8 by reducing the lawfully due figure. The counterclaim secures the damages and the repair order independently. Even if the possession claim is resolved on other grounds or withdrawn, the counterclaim survives and the damages are recoverable.

The disrepair quantum methodology

The court needs to be able to value the cross-claim in order to apply set-off. Damages for disrepair are typically calculated as a percentage reduction of the contractual rent for the period of the breach. The factors that influence the percentage include:

• Severity of the disrepair. Damp and mould affecting living areas and a child's bedroom is more serious than a minor leak in a utility cupboard.
• Extent of the affected area. Disrepair in one room is less serious than disrepair affecting most of the property.
• Duration of the breach. The percentage applies for the period the disrepair existed after the landlord had notice and a reasonable opportunity to repair.
• Impact on the tenant's use. Loss of a bedroom (forcing the tenant to sleep in the living room) is more serious than loss of an aesthetic feature.
• Health impact. Where disrepair has caused or aggravated a health condition — particularly respiratory issues from damp — the quantum increases.

The historical range for disrepair damages percentages has often been in the 15 to 35 per cent band of contractual rent for the period of breach, with severe or prolonged cases attracting higher percentages. The exact figure is fact-specific and the defence should plead a range, supported by reference to comparable cases the tenant or their adviser is aware of.

Quantum schedule (worked template)

Item of disrepair	Period of breach	Severity	Affected area	Health impact	Suggested percentage	Quantum
Damp and mould — living room	6 months	Severe	One main room	Respiratory issues in child	25%	£150/month × 6 = £900
Boiler intermittent failure	4 months	Moderate	Whole property	None	10%	£600/month × 4 × 10% = £240
Window unable to close (kitchen)	3 months	Mild	One room, security risk	None	5%	£600/month × 3 × 5% = £90
Total set-off claimed						£1,230

This schedule, filed with the defence, gives the court a concrete number to apply to the lawfully due calculation. The landlord can dispute it; the court will hear the evidence; but the schedule is now part of the record and the set-off is properly pleaded.

What evidence supports the set-off and counterclaim

The court needs documentation. The following items support most disrepair set-off claims:

• Photographs of the disrepair, dated. Take new photographs as soon as the notice arrives if you do not have older ones. Include some with a newspaper or a phone showing the date to anchor timing.
• Communications with the landlord giving notice of the disrepair. Texts, emails, letters, WhatsApp messages, voicemails. Print or screenshot them. The notice trail is what establishes the landlord's knowledge — without notice, the breach is harder to date.
• Council environmental health officer reports. If you have complained to the council and they have inspected and issued a notice or a report, this is gold-standard evidence. If you have not yet complained, consider doing so now — the council can serve an improvement notice on the landlord under the Housing Health and Safety Rating System, and the report supports the disrepair claim.
• Independent reports. A surveyor's report, an environmental consultant's mould assessment, or a similar independent document strengthens the case significantly. Cost can be a barrier, but legal aid in possession proceedings sometimes covers expert reports.
• Medical evidence. Where health is in issue, a letter from your GP confirming the diagnosis and the relationship to the property condition is powerful evidence.
• Photographs of any items the disrepair has damaged. Belongings ruined by damp, for example, can found a separate damages claim alongside the rent set-off.

The principle is: the more documentary the case, the easier the court's job and the stronger the defence.

Template defence and counterclaim paragraphs for the N11R

Adapt and paste into the relevant sections of the N11R, with your own facts and figures.

Defence section (response to the Ground 8 case):

The defendant denies that the amount of rent lawfully due is at or above the Ground 8 threshold either at the date of service of the notice or at the date of the hearing.

The claimant has been in breach of its repairing obligations under section 11 of the Landlord and Tenant Act 1985 [and/or section 9A of the same Act] [and/or the express maintenance terms at clause [X] of the tenancy agreement] in the respects particularised in the counterclaim and the disrepair schedule attached.

The defendant relies on an equitable set-off against the rent claimed, in accordance with the principle in Baygreen Properties Ltd v Gil, in the sum of £[total quantum] for the period [start date] to [end date]. The arithmetic is set out in the quantum schedule attached.

On a proper application of set-off:

(a) the rent lawfully due at the date the notice was served on [date] was £[figure], which is below the Ground 8 threshold of [threshold] for [weekly/monthly] tenancies; and

(b) the rent lawfully due at the date of this defence is £[figure], which is below the Ground 8 threshold.

The Ground 8 case accordingly fails as a matter of law and the court must refuse a possession order on Ground 8.

Counterclaim section:

The defendant counterclaims against the claimant for:

(a) damages for breach of repairing obligations under section 11 [and/or section 9A] of the Landlord and Tenant Act 1985, in the sum of £[quantum] for the period [start date] to [end date], particulars set out in the attached disrepair schedule;

(b) an order for specific performance of the repairing obligation, requiring the claimant to remedy the items of disrepair particularised in the attached schedule within [reasonable period, often 28 days];

(c) further or general damages as the court considers just;

(d) interest under section 69 of the County Courts Act 1984; and

(e) costs.

The paragraphs above are a starting point. The defence should be adapted to the particular facts, particularly the dates, the quantum, and the items of disrepair. Where the tenant has access to legal advice — through legal aid, Shelter, Citizens Advice, or a duty solicitor at court — the paragraphs should be reviewed before filing.

The relationship with mandatory and discretionary grounds

Where the landlord has cited Ground 8 alone, a successful set-off defence ends the case. There is no other ground for the court to consider; the possession claim must be dismissed.

Where the landlord has cited Ground 8 alongside one or more discretionary grounds (commonly Grounds 10 and 11 — discretionary rent arrears, covered 2026-05-18), the set-off defence defeats Ground 8 but does not automatically defeat the discretionary case. The court must then consider whether to make a possession order on the discretionary grounds, applying the reasonableness test. The same disrepair history, the same conduct of the tenancy, and the same personal circumstances all then weigh into the reasonableness analysis — and a tenant whose arrears were partly caused by a landlord's disrepair, who has counterclaimed and obtained damages, is in a strong reasonableness position. Suspended orders on terms are common in these cases; outright orders are rare.

What if the disrepair is real but the quantum is small?

A small set-off may not bring the lawfully due rent below the Ground 8 threshold. In that case:

• The Ground 8 mandatory case still proceeds, but the lawfully due figure is reduced. Even if the threshold is crossed, the arrears figure for any discretionary ground is lower, which helps the reasonableness case.
• The counterclaim still produces a damages award. Even where set-off does not defeat Ground 8, the counterclaim secures damages that reduce the net liability.
• The order for specific performance forces the repair. Even where possession is granted, the specific performance order forces the landlord to remedy the disrepair — often resulting in negotiated withdrawal of the possession claim in exchange for the tenant agreeing to a payment plan.

A small set-off is still worth pleading. The defence and counterclaim machinery is the same whether the quantum is large or small.

What if I cannot afford a counterclaim fee?

Apply for fee remission using form EX160 (and the EX160A guidance). Fee remission is available based on income and capital thresholds, and most tenants who are in arrears qualify. The application is filed alongside the counterclaim and the court processes it without requiring upfront payment.

If you also have legal aid for the possession case, the legal aid certificate will typically cover the counterclaim as well, including any expert reports.

Where RentSOS fits

RentSOS focuses on rent increase notices under Section 13. Possession proceedings under Section 8 are different mechanics, but the underlying principle is the same: the landlord must follow a procedure, the tenant has rights, and procedural attacks often defeat substantively weak (or weakly-pleaded) cases. If you have received a Ground 8 notice and you also have a Section 13 rent increase in the same period, RentSOS will check the Section 13 notice for free — that route is preserved and unchanged.

For the Ground 8 notice itself, the immediate practical steps are: keep a copy of the notice; document the disrepair (photographs, dates); pull together the notice trail (emails, texts, letters to the landlord about the disrepair); contact the council environmental health team if you have not already; consider a Subject Access Request to the landlord for any internal repair logs; and take legal advice quickly. Possession proceedings move fast; the 14-day deadline to file the defence and counterclaim is hard.

Bottom line

Ground 8 looks closed at the door. It is not. The rent that counts is the rent lawfully due, and equitable set-off — established in Baygreen Properties v Gil and consistently applied since — reduces lawfully due rent by the value of any connected cross-claim for breach of repairing obligations.

A tenant with real disrepair, a documented notice trail, and a properly pleaded set-off and counterclaim is in a strong defensive position. The defence machinery is the N11R, filed within 14 days of the N5; the procedural backbone is Baygreen; and the quantum is a percentage of contractual rent for the period of breach. Done correctly, set-off defeats a meaningful proportion of Ground 8 claims at the threshold — and where it does not defeat them outright, it reduces the arrears, secures damages, forces the repair, and reframes the reasonableness case for any discretionary grounds the landlord has stacked. The mandatory ground has a hinge, and disrepair is the key.