Toilets are shabby? It's an understatement (7)
I believe the answer is:
litotes
'an understatement' is the definition.
(I've seen this before)
'toilets are shabby?' is the wordplay.
'are shabby?' indicates an anagram.
'toilets' anagrammed gives 'LITOTES'.
'it's' is the link.
(Other definitions for litotes that I've seen before include "Town of N. Norway" , "An ironic understatement about toilets" , "Ironic figure of speech" , "not exactly truthful, for example" , "Understatement for rhetorical effect" .)