How does a rent suspension clause work?
Posted on 21st December 2018
A lease or tenancy agreement may contain a clause which suspends the rent in the event that the property becomes uninhabitable. The clause may state that there should be a suspension of the whole of the rent, or sometimes part of the rent, subject to how much of the property is usable.
Under what circumstances can you utilise a suspension of rent payment clause?
In the case of Baillie v Savage  EWHC 3035 (Ch), the tenant had reported that a garden wall in the property was bulging. Eventually, the garden wall collapsed on to the path. The tenant instructed a structural engineer to assess the premises, who opined that the property was not safe to reside in.
The combination of the previous damage and potential for further damage, which could potentially be dangerous to the tenant, was enough to invoke the rent suspension clause.
The tenant was awarded judgment, interest and a sum on account for costs.
Consideration of the limitations of the suspension clause
It is important to ensure that the rent suspension clause is not limited to engagement in respect of specified events, such as fire or flood damage. If the clause contains a restriction of this nature, it may be the case that the reason why the tenant is calling for the rent to be suspended will have to be carefully scrutinised.
What about other payments due under a lease?
Rent suspension clauses have been construed by the Courts as only applying to rent. Therefore, the clause will not necessarily apply to insurance premiums and service charge payments, if the lease stipulates that these should be paid by the tenant to the landlord. The case of P&O Property Holdings Ltd v International Computers Ltd  2 All ER 1015 determined that there should be a distinction between payment of “rent” and payment of additional “rents” when applying the rent suspension clause. The Court also mused that it would be commercially perverse to allow the tenant to use the rent suspension clause to absolve the tenant from making payment of the insurance contributions.
Things that you need to consider about rent suspension clauses
Should all or part of a property let on a lease or tenancy agreement become uninhabitable then it is important to consider:
- Is there is a rent suspension clause,
- Does the rent suspension clause stipulate that it can only be utilised in certain circumstances, and
- The evidence available to show that the property is uninhabitable.