Can you get an SDLT refund for an uninhabitable property or a reservation agreement?

Introduction

People often ask whether there is still a “stamp duty holiday”, whether SDLT can be reduced before completion, or whether a refund can be claimed afterwards. In practice, SDLT refunds are not based on a general holiday or broad renovation relief. They depend on specific legal rules.

Two issues commonly arise. The first is whether a dwelling was genuinely not suitable for use as a dwelling at the effective date of the transaction, so that non-residential rates applied instead of residential rates. The second is whether an earlier contractual arrangement, such as a reservation agreement in a new-build context, affects the SDLT analysis.

The key point is that these are fact-sensitive areas. A buyer cannot assume that because a property needs work, or because they spent money on refurbishment, SDLT can automatically be reclaimed.

The Question

A buyer living overseas is purchasing a property for £97,000 and wants to know whether any SDLT relief or refund is available. The buyer says that on an earlier purchase they paid SDLT in full and later recovered part of it after specialist advice relating to a reservation agreement. They now want to know whether, on this purchase, there is any equivalent route to reduce SDLT upfront or reclaim it after completion.

A follow-up question asks what percentage can be claimed back, whether this depends on the amount spent on refurbishment, and whether there is any minimum spend.

Nick’s Explanation

Nick’s explanation identifies two possible lines of enquiry, depending on the facts.

First, if the property is a typical buy-to-let or other dwelling in very poor condition, the question is whether its condition at purchase was so serious that it was not suitable for use as a dwelling. In anonymised form, his point was that any reclaim would be based on the property’s condition at the time of purchase, especially whether there were hazards serious enough to support an argument that the dwelling was uninhabitable for SDLT purposes.

Secondly, he noted that the buyer’s earlier experience appeared to involve a different issue: a new-build purchase with a reservation agreement made before construction, where it may have been argued that the transaction should be analysed by reference to the earlier stage of the deal.

He also made clear that, where a property-condition argument is being considered, the practical evidence usually includes photographs and other material showing the state of the property before renovation works began.

The important clarification is that the “two thirds back” figure discussed in the correspondence was not a legal rule about HMRC repaying two thirds of SDLT, nor was it linked to refurbishment spend. It reflected a commercial estimate after deduction of professional fees in that particular example. Legally, the issue is usually binary: either the property qualified to be taxed on non-residential rates, or it did not.

The Law

SDLT is charged under the Finance Act 2003. The amount payable depends on the nature of the land transaction and whether the subject matter is residential property, non-residential property, or mixed property.

For SDLT purposes, a building counts as residential property if it is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use. If, at the effective date of the transaction, the building is not suitable for use as a dwelling, it may fall outside the residential definition and be taxed at non-residential rates instead.

The effective date is usually completion, unless the legislation treats an earlier event as the effective date, for example substantial performance of a contract.

Where too much SDLT has been paid, the buyer may amend the SDLT return or make a repayment claim within the applicable statutory time limits.

In condition cases, the modern case law is important. The courts have repeatedly said that the test is not whether the property needs repair, modernisation, or refurbishment. The question is whether, viewed realistically at the effective date, it was suitable for use as a dwelling.

That threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. A property will not be treated as non-residential merely because it is dated, run down, in disrepair, or requires substantial works. The defects must be serious enough to mean the building is not suitable for use as a dwelling at the relevant date.

Analysis

The first step is to identify the actual basis on which relief or a refund is being suggested.

If the argument is about property condition, the legal question is not how much the buyer spent on refurbishment and not whether there is a minimum spend. SDLT law does not provide a rebate by reference to renovation cost. A buyer does not recover tax because they later improved the property.

Instead, the relevant question is the condition of the property at the effective date of the transaction. Evidence may include:

• pre-completion photographs
• survey reports
• builder or contractor reports
• environmental health material
• evidence of missing essential facilities such as a functioning kitchen, bathroom, water, electricity or safe structure
• evidence of serious hazards, contamination, severe fire damage, collapse risk, or similar defects

The second step is to apply the “suitable for use as a dwelling” test. Many properties described as “uninhabitable” in everyday language do not meet the SDLT test. A property may be unattractive, vacant, damp, vandalised, or in need of major renovation and still be treated as residential for SDLT.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is demanding. The court’s approach makes it harder to succeed on condition alone unless the defects are genuinely severe at the transaction date.

The third step is to consider whether the buyer’s earlier “reservation agreement” experience is actually relevant. That is a separate issue from property condition. In some new-build cases, the timing and legal effect of earlier contractual arrangements can matter. But that does not create a general SDLT refund scheme for all later purchases. It depends on the structure of the transaction and the statutory rules on effective date and chargeable consideration.

The fourth step is to consider the figures. On a £97,000 purchase, the SDLT position depends heavily on whether the buyer is paying standard residential rates, higher rates for additional dwellings, or non-residential rates. If the buyer is non-UK resident for SDLT purposes, the non-resident surcharge may also need to be considered. So the amount at stake cannot be assessed accurately without confirming:

• whether the property is residential, non-residential, or mixed
• whether the buyer already owns another dwelling
• whether the higher rates for additional dwellings apply
• whether the non-UK resident surcharge applies
• the precise completion date and rates in force at that time

The fifth step is procedural. If there is a genuine technical argument for non-residential treatment or overpayment, the usual safer course is often to file and pay on the basis the conveyancer considers correct, then pursue an amendment or reclaim if proper evidence supports it. Whether that is appropriate depends on the strength of the legal position and the filing deadline.

Outcome

There is no general SDLT holiday or renovation relief available simply because a buyer is purchasing a low-value property or intends to refurbish it.

A refund may be possible only if there is a proper legal basis. In the scenario described, the two possible bases are:

• a property-condition argument that the dwelling was not suitable for use as a dwelling at the effective date, so non-residential rates should have applied; or
• a separate technical argument based on the structure and timing of the transaction, such as an earlier contractual arrangement in a new-build context.

The “two thirds” figure is not a statutory refund percentage and is not linked to refurbishment costs. If a condition-based claim succeeds, the tax recalculation is based on the correct SDLT treatment of the transaction, not on how much was spent on works.

Because of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the bar for showing that a dwelling was not suitable for use is now relatively high.

Practical Steps

To assess whether any SDLT refund is realistically available, a buyer should gather the following:

• the purchase contract and transfer
• the SDLT return and SDLT5 certificate
• completion statement
• survey and valuation reports
• dated photographs showing the condition of the property at or before completion
• quotes, invoices and contractor reports, if they describe the pre-existing defects
• details of any earlier reservation agreement, exchange arrangement or substantial performance
• confirmation of whether the buyer owned other dwellings and whether they were non-UK resident for SDLT purposes

Then work through these questions:

1. Was the property actually suitable for use as a dwelling on completion?
2. If not, what objective evidence proves that?
3. Was there any earlier event that could affect the effective date for SDLT?
4. What SDLT rates were applied, and were higher rates or the non-resident surcharge included?
5. Is the claim still within the statutory time limit?

If the evidence shows only that the property needed refurbishment, redecoration, updating, or ordinary repair, a reclaim is unlikely to succeed. If the evidence shows serious defects going to basic habitability, a closer legal review may be justified.

Conclusion

A buyer cannot claim SDLT back simply because they refurbish a property or because they once obtained a refund on a different type of transaction. The real question is whether there is a specific legal basis for overpayment. In condition cases, the test is strict, and after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 the threshold for showing a dwelling was not suitable for use is relatively high.

Legal References Used

• Finance Act 2003
• 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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