Can you reclaim SDLT if a property was in poor condition when you bought it?

Introduction

Many buyers ask whether they can reclaim Stamp Duty Land Tax (SDLT) because a property needed major works when it was bought. This usually comes up where the dwelling had defects, was vacant, had no working kitchen or bathroom, or needed substantial refurbishment.

The key legal question is not whether the property was run-down. It is whether, on the effective date of the transaction, the property was suitable for use as a dwelling. That is a stricter test than many people expect. The courts have made clear that the threshold is now relatively high, especially following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A purchaser provided evidence for several residential property purchases and asked whether SDLT reclaims might be viable on the basis that the properties were in poor condition at the time of purchase. The evidence included photographs and transaction paperwork, and further supporting documents such as survey reports were being considered.

The practical issue was whether the condition of those properties at completion could support a reclaim on the basis that they were not suitable for use as dwellings.

Nick’s Explanation

Nick’s explanation, in anonymised form, was that the first step is to review the factual evidence carefully before deciding whether a reclaim is viable. He asked for:

• photographic and video evidence for each property;
• transaction documents;
• questionnaire responses about the condition of each dwelling; and
• where available, survey reports.

He also explained that the case team would assess the material and give a view on viability before the claims progressed further.

That approach reflects the way these cases should be analysed. A claim about unsuitability for use is evidence-heavy. It turns on the actual state of the property at the effective date, not on later renovation work and not simply on the buyer’s intention to refurbish.

The Law

SDLT is charged under the Finance Act 2003. Whether the residential rates apply depends, in part, on whether the subject matter of the transaction includes a dwelling.

The legislation does not treat every damaged or neglected building as non-residential. A building can still be a dwelling even if it is in poor repair, dated, or in need of substantial modernisation.

The main legal issue in these cases is whether the property was “suitable for use as a dwelling” at the effective date of the transaction. That wording has been considered in a line of cases, including:

• PN Bewley Ltd v HMRC [2019] UKFTT 65 (TC);
• Mudan and another v HMRC, culminating in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The more recent appellate guidance is especially important. It confirms that the threshold for showing a property was not suitable for use as a dwelling is relatively high. Serious disrepair is not automatically enough. The question is one of objective suitability at the relevant date.

Analysis

When considering whether a reclaim may succeed, it helps to work through the issue in stages.

First, identify the relevant date. For SDLT, the condition of the property must be assessed at the effective date of the transaction, usually completion. Evidence from before and after that date may help, but only insofar as it shows the true condition at that time.

Second, separate poor condition from legal unsuitability. Many properties are bought as renovation projects. They may have damp, defective wiring, missing plaster, old kitchens, worn bathrooms, heating problems, leaks, or structural issues. Even so, they may still remain suitable for use as dwellings in law.

Third, consider the core features of habitability. Relevant factors may include whether the property had:

• basic shelter and weatherproofing;
• functioning sanitation;
• water and electricity, or the practical ability to use them;
• sleeping and living accommodation;
• cooking facilities or the realistic ability to install or use them without major reconstruction; and
• damage so severe that ordinary residential occupation was not realistically possible.

Fourth, assess the seriousness of the defects. A property is more likely to fall outside the dwelling definition where there is extreme damage, such as extensive fire damage, major structural collapse, or conditions making occupation unsafe or impossible without major rebuilding. By contrast, the following often do not suffice on their own:

• an outdated or incomplete kitchen;
• a bathroom in poor condition;
• general disrepair;
• vacancy before purchase;
• mould, damp, or infestation that is remediable;
• missing floor coverings or internal finishes; or
• the buyer’s plan to carry out substantial works after completion.

Fifth, look at the evidence. Strong evidence may include:

• a contemporaneous survey report;
• lender or valuer comments showing the property was not habitable;
• dated photographs and videos;
• contract and completion documents;
• invoices or reports showing the nature of urgent remedial works; and
• any local authority or insurance records relevant to the condition.

Sixth, apply the current case law carefully. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the courts have reinforced that “not suitable for use as a dwelling” is a demanding test. The fact that a property needed extensive refurbishment does not, by itself, make it non-residential for SDLT purposes.

Outcome

The practical conclusion is that a buyer may be able to reclaim SDLT if the property was truly not suitable for use as a dwelling at completion, but these cases are narrower than many people assume.

If the property was merely run-down, unattractive, or in need of major refurbishment, that will often not be enough. The legal threshold is now relatively high, particularly after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

A claim is therefore most likely to succeed where there is clear contemporaneous evidence of severe defects going beyond ordinary disrepair and showing genuine objective unsuitability for residential use at the effective date.

Practical Steps

If you are assessing a possible SDLT reclaim in this area, gather and review the following:

• the TR1 transfer;
• the signed sale contract;
• the completion statement;
• the SDLT5 certificate;
• any survey or valuation report prepared around the purchase date;
• dated photographs and videos showing the property’s condition at or near completion;
• builder, engineer, electrician, or surveyor reports identifying serious defects;
• mortgage lender comments, especially if lending was restricted because of condition; and
• a clear timeline showing what the property was like on completion and what works were done afterwards.

Then ask these questions:

• Was the property objectively capable of normal residential occupation at completion?
• Were the defects so serious that the building could not realistically be used as a dwelling?
• Is there contemporaneous evidence proving that point?
• Does the evidence show more than just a need for refurbishment or modernisation?

Conclusion

A property does not stop being a dwelling just because it is in very poor condition. For SDLT purposes, the real question is whether it was suitable for use as a dwelling at the effective date of the transaction. That is now a relatively high threshold, and Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 makes clear that ordinary disrepair, even if substantial, will often not be enough.

Legal References Used

• Finance Act 2003
• PN Bewley Ltd v HMRC [2019] UKFTT 65 (TC)
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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