Thanks for your reply.
The position is that you can terminate the tenancy if the property is unfit for human habitation. This is a repudiatory breach of contract by the landlord; a breach of a contract term that is so serious and fundamental that it goes to the root (ie. the heart) of the contract so as to deny you the whole, or substantially the whole of the benefit of the contract.
If the property is so unfit then you are entitled to unilaterally terminate the contract and for the rent and deposit monies to be returned to you. It is obviously crucially important that you are able to prove the breach. If you have photos and a statement in writing (eg. correspondence from agent) agreeing that the damp is of such a nature that the property is unfit for human habitation then this would help.
If you feel that no progress is being made by the agents then you should see a local landlord and tenant solicitor taking what documentary evidence you have. They will write a letter confirming the circumstance and that you are terminating the agreement and require the monies to be returned to you. It will state that if the money is not returned within a fixed time (eg. two weeks) you will issue a claim in the small claims court against the landlord. Hopefully this will prompt his compliance.
It should cost around £40-50 for the letter, if you do not wish to spend this money you can write in the form above yourself. It may be that a solicitor's letter carries more weight though.
If you are confident in the evidence you will be able to produce then you can issue the claim yourself by using http://www.moneyclaim.gov.uk/. It's fairly cheap and very easy to use.
You may also wish to speak the local authority's environmental health department to ask for an inspection to be made. If they find it unfit they will issue serve this as a notice upon the landlord and you can use this as further evidence. Alternatively you may use the threat of this as leverage before seeing a solicitor to see if you can get any traction.
You can find local landlord and tenant solicitors by using the Law Society search engine:-
Make sure you dealings with the agent are only in writing (eg, email) and keep copies of everything, this will help in any claim you issue in the future.
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