Hello, my name is ***** ***** I am a qualified lawyer happy to help you today.
By law, landlords must ensure your health and safety in the property. Mould is a health risk and if they do not fix it, they are in breach of contract. They are also in breach of the provisions of the Landlord and Tenant Act 1985.
If they fail to fix the mould they also face prosecution by the local council and can be fined. I would therefore threaten to report them to the local council. That may deter the landlord from pursuing you for the rent (in an uninhabitable property).
If the landlord decides to sue, you should defend the claim on the basis it was they who were in breach of contract. You can also counter claim for your losses as a result of having move out and if they owe you any rent since day 1 and the deposit too. It is easy to defend a claim - the court will send you a claim form which sets out details of the landlord's case and a response pack - you must fill out the response pack to indicate your intention to defend the claim and return it to the court as soon as possible.
In the meantime you might want to tell the agent and landlord you have evidence of the mould and that you consider the landlord to be in breach of contract - and that if they sue then you will robustly defend the claim. I would not recommend you pay them anything. If you have financial losses, send the landlord a letter to set them out and demand payment within 14 days - if you do not hear back then start a claim at http://www.moneyclaim.gov.uk
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