To set off off one thing against another of roughly equal value. Like a trade off.
In lettings terms this is most likely to describe setting off rent against e.g. maintenance works or their value.
A tenant might say “I will fix that ,if you knock £20 off my rent.” See also consideration.
A case in question:
Miah v McGrogan  EWCA Civ 1685
In this case the landlord ignored pleas to make the house habitable and after several months the student tenants refused to pay all the rent, claiming the property was uninhabitable and the rent set off was reasonable compensation in such circumstances – the judge agreed.
This is a fair warning to landlords that they must provide a habitable standard of accommodation in return for any rent and failure to so within a reasonable time of being put on notice can result in the tenant using the rent to do so..