Can a company reclaim SDLT on a refurbished property?

Introduction

Many buyers ask whether Stamp Duty Land Tax (SDLT) can be reclaimed where a property was bought in poor condition and then refurbished. The short answer is: sometimes, but only in limited situations.

The key issue is the property’s status on the effective date of purchase. If the building was not suitable for use as a dwelling at that date, the transaction may have been chargeable at non-residential rates rather than residential rates. In some cases, that can lead to an SDLT refund. In other cases, the real issue is not “uninhabitable” status at all, but whether the purchase was mixed-use, involved six or more dwellings, or whether the SDLT was simply overpaid by calculation error.

The Question

A company that bought several properties and later refurbished them wanted to know whether it could reclaim SDLT already paid. The concern was that some of the properties may have been in such poor condition at purchase that they should not have been treated as dwellings for SDLT purposes. There was also a question whether one of the acquisitions, because of its character and use, may instead have fallen into a non-residential or mixed-use category.

Nick’s Explanation

Nick’s main point was that a refund may be possible where a property was “not suitable for use as a dwelling” at the date of purchase, but the threshold is high.

In anonymised form, his explanation was:

If a property was not suitable for use as a dwelling at the date of purchase, it should be assessed as non-residential for SDLT purposes. If higher rate SDLT was paid, there may be scope to reclaim the overpaid tax, but only if the condition of the property meets a very high threshold.

He also stressed that HMRC will not usually accept a claim simply because the property needed renovation:

For HMRC to accept that a property was not suitable for use, it generally needs to be in a derelict or dangerous condition, not merely in need of refurbishment.

Nick then identified an important practical point: before focusing only on “unsuitable for use” arguments, the buyer should check whether the transaction was already taxed at non-residential rates, whether there had been a simple overpayment, or whether another route such as mixed-use or six-or-more-dwellings treatment applied.

The Law

SDLT is charged under the Finance Act 2003. Different rates apply depending on whether the subject matter of the transaction is residential, non-residential, or mixed.

Broadly:

• a building used or suitable for use as a dwelling is generally treated as residential property;
• property that is not suitable for use as a dwelling may fall outside the residential definition;
• a transaction involving both residential and non-residential property is treated as mixed-use and charged at non-residential rates;
• a purchase of six or more dwellings can also be taxed using non-residential rates.

The difficult area is deciding when a damaged or run-down building has ceased to be “suitable for use as a dwelling”. That question has been heavily litigated.

In uninhabitable or not suitable for use cases, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The Court of Appeal confirmed that serious disrepair is not enough by itself. The building must have lost its character as a dwelling, or be in such a state that it is no longer suitable for residential use in the relevant SDLT sense.

Analysis

To work out whether an SDLT reclaim is possible, the buyer should go through the following steps.

First, identify what SDLT treatment was actually used on the original return.

This matters because some buyers assume they paid residential SDLT when in fact the return was filed on non-residential rates already. If that happened, there may be no “uninhabitable dwelling” reclaim at all. The only possible refund may be a straightforward overpayment if the SDLT was miscalculated.

Second, check the true purchase price and the SDLT actually paid to HMRC.

Completion statements can be misleading if they show the balance due after a deposit rather than the total consideration. Before considering legal arguments about dwelling status, the figures must be verified against the SDLT return, SDLT5 certificate, solicitor file and HMRC calculation.

Third, consider whether the transaction was mixed-use.

If part of what was bought was genuinely non-residential, for example commercial space, land used for a non-residential purpose, or property with a non-residential character at the effective date, the whole transaction may have been chargeable at non-residential rates. In practice, that can produce the same tax result as an “unsuitable for use as a dwelling” argument, but the legal basis is different.

Fourth, consider whether the acquisition involved six or more dwellings.

Where six or more dwellings are acquired in a single transaction or linked transactions, the purchaser can generally be taxed at non-residential rates. For larger residential blocks, HMOs, or similar buildings, this can be an important alternative route.

Fifth, only then assess whether the property was not suitable for use as a dwelling.

This is where many claims fail. A property does not become non-residential just because it had no modern kitchen, needed rewiring, required damp treatment, had broken plaster, outdated bathrooms, or needed a full refurb. Following Mudan, the threshold is comparatively demanding. Evidence needs to show something closer to true dereliction, danger, or loss of residential identity at the purchase date.

Examples that may support an argument include:

• serious structural instability;
• conditions making occupation dangerous;
• extensive destruction or stripping out so severe that the building has lost the character of a dwelling;
• contemporaneous evidence showing it could not realistically be occupied as a home.

Examples that often do not suffice on their own include:

• general disrepair;
• old or unusable fittings that could be replaced in renovation works;
• lack of decoration;
• an investor purchase intended for refurbishment;
• auction sale wording describing a property as requiring modernisation.

Sixth, gather evidence from the date of purchase.

Nick emphasised the evidential burden. The strongest evidence usually includes survey reports, photographs, auction particulars, valuation material, planning documents, insurance records, contractor reports and any lender correspondence showing the property’s actual state at completion. Later refurbishment invoices are useful background, but they do not prove the SDLT position unless they show what condition existed at the effective date.

Seventh, consider the amendment or reclaim route.

If the SDLT return was wrong, the buyer may need either an amendment, if still in time, or an overpayment relief claim. The correct route depends on timing and the procedural history of the transaction. The legal argument should match the facts precisely: overpayment, mixed-use, six-or-more-dwellings, or not suitable for use as a dwelling.

Outcome

A company cannot reclaim SDLT just because it bought properties, refurbished them and spent substantial sums improving them. Refurbishment after purchase is not the test.

A reclaim may be possible if:

• the SDLT was simply overpaid or miscalculated;
• the transaction should have been treated as mixed-use;
• the purchase involved six or more dwellings; or
• the property was genuinely not suitable for use as a dwelling at the purchase date.

Where the claim relies on the property being uninhabitable or unsuitable for use, the threshold is now high, especially after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Practical Steps

If you are assessing a possible reclaim, gather the following for each transaction:

• the SDLT return and SDLT5 certificate;
• the completion statement;
• confirmation of the total purchase price;
• evidence of the SDLT actually paid to HMRC;
• auction particulars or sales particulars;
• photographs showing the condition at purchase;
• survey reports, valuations and lender reports;
• planning documents and any records showing non-residential use or mixed use;
• details of the number of units acquired;
• any documents showing the building’s prior use, such as care home, HMO, commercial or institutional use.

Then ask these questions in order:

1. Was SDLT already paid at non-residential rates?
2. Was the tax amount calculated correctly?
3. Was the transaction mixed-use?
4. Did it involve six or more dwellings?
5. If not, was the property truly not suitable for use as a dwelling at the effective date?

Conclusion

An SDLT reclaim on a refurbished property is possible, but only where the original SDLT treatment was wrong. The strongest claims are often based on mixed-use treatment, six-or-more-dwellings treatment, or a clear calculation error. Claims based on a property being uninhabitable are still possible, but the legal threshold is now relatively high after Mudan, so careful evidence from the date of purchase is essential.

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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