Can a Property With No Kitchen or Heating Be Treated as Non-Residential for SDLT?

Introduction

Many buyers ask whether a run-down dwelling can avoid residential Stamp Duty Land Tax treatment because it is said to be “uninhabitable”. This usually matters where the buyer is a company or already owns other property, because the residential SDLT rates can be much higher.

A common example is a house with major defects, missing fittings, or obvious disrepair. Buyers often assume that if there is no boiler, no radiators, no usable kitchen, boarded windows, or signs of abandonment, the property must fall outside the residential rules. The law is more restrictive than that, and recent case law has made the threshold for “not suitable for use as a dwelling” relatively high.

The Question

A buyer was considering purchasing a dwelling through a company for about £150,000 using bridging finance. The property had undergone underpinning which had been signed off. It had no boiler or radiators, no functioning kitchen, and part of the interior had been stripped back to a very basic state. There was also evidence of poor living conditions and some boarding up. Water was still available in the property.

The issue was whether the condition of the property meant it could qualify for SDLT treatment other than as residential property, on the basis that it was not suitable for use as a dwelling at the effective date of the transaction.

Nick’s Explanation

Nick’s response focused on evidence and timing. In substance, he asked for photographs, a survey, sales particulars, and confirmation of whether the condition shown was the condition at the time of purchase. That reflects the key legal point: these cases turn heavily on the actual state of the property on the effective date, and on the quality of the evidence available.

His approach can be summarised like this:

• you need evidence of the condition at completion, not just after works have started or after strip-out;
• marketing details, surveys, photographs, and contemporaneous records are important;
• missing items such as a kitchen or heating system do not automatically mean the property is not suitable for use as a dwelling;
• the question is whether the property had crossed the legal threshold for being unsuitable for use as a dwelling, which is now a demanding test.

That is a sensible summary of the current position. A buyer may feel that a property is effectively abandoned or not realistically liveable, but SDLT law asks a narrower question.

The Law

SDLT on land transactions is charged under the Finance Act 2003. Whether a property is residential or non-residential matters because different rate structures apply.

The starting point is section 116 of the Finance Act 2003. Broadly, property is “residential property” if it consists of:

• a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use;
• land that forms part of the garden or grounds of such a building; or
• an interest or right over land that subsists for the benefit of such a building or land.

For these purposes, the central question in many “uninhabitable” cases is whether the building was “suitable for use as a dwelling” at the effective date of the transaction.

HMRC’s view appears in its SDLT manual, including guidance on residential property and suitability for use as a dwelling. However, the courts determine the meaning of the legislation.

The recent and important authority is Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Following that decision, the condition threshold in an uninhabitable or not suitable for use case is now relatively high. The fact that a property is in poor repair, lacks some facilities, or needs significant renovation will not necessarily stop it being residential property for SDLT purposes.

Analysis

The correct analysis is to apply the statutory test to the condition of the property at the effective date, usually completion.

Step 1: identify the actual legal question.

The question is not whether the property was attractive, mortgageable, compliant with modern expectations, or sensible to occupy in practice. The question is whether it was suitable for use as a dwelling within section 116 Finance Act 2003.

Step 2: look at the condition at the effective date.

Evidence must show what the property was like when the transaction took effect. That is why pre-completion photographs, survey reports, auction or estate agent particulars, completion statements, builder records, and dated correspondence matter. If the property was stripped out after exchange or after completion, that may not help.

Step 3: assess the missing kitchen.

A missing or unusable kitchen is relevant, but it is not conclusive. A great many older cases and HMRC disputes have shown that the absence of fitted units, appliances, or finishes does not automatically make a building unsuitable for use as a dwelling. The court will look at the overall character and functionality of the building.

Step 4: assess the missing heating system.

No boiler and no radiators are also relevant, but again not decisive on their own. A property can still be a dwelling even if it lacks central heating. The issue is whether the overall condition is so serious that the building has crossed the line from a defective dwelling into something not suitable for use as a dwelling at all.

Step 5: consider the wider facts.

Here, there was running water, the underpinning had been completed and signed off, and the property remained a house in physical form. The fact that the owner was occupying it in very poor conditions may actually point both ways. It may support an argument that the building was in a bad state, but it may also suggest that the building still retained the basic character of a dwelling capable of occupation.

Step 6: apply the post-Mudan threshold.

After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the courts have made clear that the threshold is relatively high. Serious disrepair, missing fixtures, and substantial renovation needs may still leave the property within the residential definition. A buyer usually needs something more fundamental than the absence of a kitchen and heating, especially where the structure remains intact and utilities or sanitary facilities are still present.

Step 7: consider company purchase implications.

If the property is residential, a company buyer will generally face the residential SDLT regime rather than non-residential rates. Depending on the circumstances, that may include higher charges than an individual buyer would expect. The “unsuitable for use” argument therefore needs to be supported by strong evidence, not just a general impression that the property was derelict.

Outcome

On the facts described, the case for non-residential SDLT treatment looks uncertain and may be difficult. A property with no boiler, no radiators, and no usable kitchen is not automatically outside the residential rules. If the structure remains that of a house, water is available, and the defects are essentially matters of strip-out and repair, the property may still be treated as residential.

In particular, following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for showing that a dwelling was not suitable for use as a dwelling is now relatively high. On a limited factual record, this sort of case would need careful evidence before concluding that non-residential rates apply.

Practical Steps

If you are assessing a similar purchase, the sensible next steps are:

• obtain dated photographs showing the exact condition at completion;
• collect the sales particulars and any auction pack or estate agent description;
• obtain a survey or contractor report describing the condition as at the transaction date;
• identify what facilities were still present, including water, sanitation, electricity, cooking facilities, and means of heating;
• check whether any strip-out happened before or after completion;
• review whether the building remained structurally a dwelling even if in poor repair;
• compare the facts against section 116 Finance Act 2003 and the reasoning in Mudan.

The stronger the evidence of fundamental unsuitability at the effective date, the better the argument. Without that evidence, HMRC is likely to treat the property as residential.

Conclusion

A house does not stop being residential for SDLT just because it has no kitchen, no boiler, or needs major works. The legal test is whether it was suitable for use as a dwelling at the effective date, and that is now a demanding test. In a case like this, the answer will depend on detailed evidence, but the facts described do not obviously clear the current threshold for non-residential treatment.

Legal References Used

• Finance Act 2003, section 116
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• HMRC Stamp Duty Land Tax Manual guidance on residential property and suitability for use as a dwelling

This page was last updated on 22 March 2026.

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