Can you reclaim higher rate SDLT if a property had no working kitchen or toilet?

Introduction

Buyers often ask whether they can recover higher rate Stamp Duty Land Tax (SDLT) where the property they bought was empty, in poor condition, and needed major work before anyone could live there. A common example is a flat or house with no functioning kitchen or toilet, ongoing rewiring, damaged walls or ceilings, and no furniture.

The key legal question is not simply whether the property was inconvenient, unmortgageable, or in need of renovation. The question is whether, on the date of completion, it was suitable for use as a dwelling for SDLT purposes. That threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer purchased a residential property in a run-down condition. At the time of purchase, the property was empty and unfurnished. The buyer said there was no functioning toilet or kitchen, rewiring was being carried out, and repairs to walls and ceilings were needed. The property had effectively been sold as a renovation project, and the buyer wanted to know whether those facts could support a reclaim of higher rate SDLT on the basis that the property was not suitable for use as a dwelling at completion.

Nick’s Explanation

Nick focused on the evidence needed to test whether the property was truly uninhabitable at the date of purchase, rather than merely in poor condition.

In substance, his points were:

• the photographs must show the property in the same condition it was in on completion;
• original-condition evidence is important, including pre-purchase photographs, surveys, and sales particulars if available;
• the legal test is demanding, and a property must be genuinely derelict before HMRC is likely to accept that it was unsuitable for use as a dwelling;
• to succeed, the buyer would need to show that the property had effectively lost its identity as a dwelling at completion.

Nick’s core reasoning can be summarised this way: a missing or non-functioning kitchen and toilet may help, but they do not automatically prove the property was not a dwelling for SDLT. The full condition of the property at completion matters, and the evidence must show something more than a property needing refurbishment.

The Law

SDLT is charged under the Finance Act 2003. Whether the residential rates and the higher rates for additional dwellings apply depends on whether the subject matter acquired includes a “dwelling”.

The legislation does not turn simply on how the property was described in the contract or whether it was vacant. The issue is whether, at the effective date of the transaction, the building was suitable for use as a dwelling.

This question has been considered in a number of cases, including:

• PN Bewley Ltd v HMRC [2019] UKUT 65 (TCC)
• Mudan & Anor v HMRC in the Upper Tribunal
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

The modern position is that the test is strict. A property does not stop being a dwelling merely because it is dilapidated, requires substantial repairs, lacks modern fittings, or is temporarily incapable of occupation without works. The courts have drawn a distinction between:

• a dwelling in poor or even very poor condition; and
• a building so damaged or stripped out that it is no longer suitable for use as a dwelling at all.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition thresholds in uninhabitable or not suitable for use cases are now relatively high. In practice, the taxpayer usually needs to show a genuinely derelict property that has effectively ceased to function as a dwelling.

Analysis

In a case like this, the analysis usually works in five stages.

1. Identify the condition on the completion date

   The relevant date is the effective date of the transaction, usually completion. Later works do not prove the earlier condition unless they are supported by reliable evidence showing what existed at completion.

2. Consider what was actually wrong with the property

   Here, the reported issues were: no functioning toilet, no functioning kitchen, rewiring, empty rooms, and repairs to walls and ceilings. Those facts are relevant and may point towards serious disrepair. But they are not conclusive on their own.

3. Ask whether the property was merely in need of renovation, or had ceased to be a dwelling

   This is the central issue. Many properties are bought without a usable kitchen or bathroom and still count as dwellings for SDLT. Likewise, an empty property undergoing works may still remain residential property. The buyer must show more than inconvenience or substantial refurbishment.

4. Test the evidence objectively

   HMRC and the tribunal will look for objective material such as:

   • dated photographs from the time of purchase;
   • a survey or valuation describing the state of repair;
   • auction or estate agent particulars;
   • invoices and contractor evidence;
   • evidence that essential facilities were absent or unusable;
   • evidence of wider structural or safety issues, if any.

   Council tax correspondence may help show that the property was empty and undergoing major repair works, but that does not decide the SDLT position. Council tax rules and SDLT rules are different.

5. Assess whether HMRC is likely to accept a reclaim

   If the evidence shows only that the property was sold as a renovation project with no working kitchen or toilet, HMRC may still argue that it remained a dwelling. A stronger case usually needs evidence of a more fundamental loss of residential function, such as severe dereliction, dangerous condition, or the stripping out of essential elements to such an extent that the building no longer had the character of a dwelling.

So, while the absence of a functioning kitchen and toilet is important, it is not enough by itself. The question is whether the property had effectively lost its identity as a dwelling on completion. That is exactly the point Nick was making.

Outcome

A buyer in this situation may have an arguable SDLT reclaim case, but success is far from automatic. The present case law sets a high bar. Evidence that the property was empty, unfurnished, under repair, and lacked a working kitchen and toilet may support the argument, but the claim is strongest only where the property was genuinely derelict and no longer suitable for use as a dwelling at completion.

If the property was simply a poor-condition flat or house needing restoration, HMRC may still treat it as residential, meaning the higher rates would remain due if the buyer owned another dwelling at the time.

Practical Steps

If you are assessing a possible reclaim, gather evidence in this order:

1. Find photographs showing the exact condition on the completion date.
2. Obtain any survey, valuation, mortgage report, or builder’s assessment prepared close to purchase.
3. Locate any sales particulars, auction pack, or marketing description.
4. Collect invoices, receipts, and records of the works started immediately after completion.
5. Prepare a clear schedule of defects that existed on completion, separating essential failures from cosmetic issues.
6. Check the SDLT return filed and identify whether the reclaim would be based on the property not being a dwelling at the effective date.
7. Compare the facts carefully against the stricter approach confirmed by Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

It is also important not to rely too heavily on council tax treatment. A local authority may accept that a property is empty and undergoing major works, but that does not mean HMRC must accept that it was unsuitable for use as a dwelling for SDLT.

Conclusion

A property with no working kitchen or toilet and ongoing repairs is not automatically outside the SDLT dwelling rules. The legal test is whether it was suitable for use as a dwelling on completion, and that threshold is now relatively high. After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, a successful reclaim usually requires strong evidence that the property was genuinely derelict and had effectively ceased to be a dwelling.

Legal References Used

• Finance Act 2003
• PN Bewley Ltd v HMRC [2019] UKUT 65 (TCC)
• 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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