The property was in a terrible state due to vandalism and neglect, resulting in water damage through shattered windows and decaying flooring.

This former local authority property had been unoccupied for a period, leading to vandalism that caused significant damage. The broken windows allowed water to enter and resulted in rotting flooring and damaged walls.

Despite the clear signs of disrepair, the buyer’s conveyancing lawyer still classified the property as “habitable” and “residential” for stamp duty purposes, leading to an unnecessary tax burden of £3750.

This property, upon purchase, was in a state of severe disrepair due to acts of vandalism. The primary issues with the property were insecurity, dangerous living conditions caused by holes in the floor and electrical hazards, and bedrooms that were not usable due to a large hole in the wall.

According to the Home Habitability Act of 2018, if a property does not meet the standards set forth in the act, it should be considered uninhabitable or not suitable for living and therefore cannot be considered “residential.” In this case the property is considered “non-residential,” and not subject to any stamp duty.

Highlighted issues

As anticipated, HMRC accepted the classification of the property as ‘non-residential’, making it eligible for the zero stamp duty rate for non-residential properties up to £150,000. As a result, the buyer received a refund of £3750.

Despite the simplicity of the case, the conveyancing solicitor involved in the transaction mistakenly designated the property as ‘residential’ in the stamp duty return submitted to HMRC, causing the buyer to incur an unnecessary expense of £3750. Fortunately, the matter was eventually resolved.