Can you reclaim SDLT if a flat had no kitchen, an unusable bathroom and unsafe access?

Introduction

Many buyers ask whether Stamp Duty Land Tax can be reduced or reclaimed where a property was in very poor condition when bought. A common example is a flat or house with no working kitchen, no usable bathroom, or serious structural defects.

The key issue is whether the property was merely in disrepair, or whether it was truly “not suitable for use as a dwelling” at the effective date of the transaction. That distinction matters because HMRC and the courts apply a strict test. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition threshold is now relatively high.

The Question

A buyer asked about a low-value flat purchased as an additional dwelling, so the higher SDLT rates were paid. At the date of purchase, the flat reportedly had:

• no kitchen,
• an unusable bathroom,
• unsafe stairs leading to the accommodation, and
• a generally stripped-out internal condition.

The buyer said the property had been empty for several years and estimated that around £13,000 of work was needed to make it habitable. The question was whether those facts could support an SDLT reclaim on the basis that the property was not suitable for use as a dwelling when acquired.

Nick’s Explanation

Nick’s response was cautious. He asked for photographs, any survey evidence, third-party verification, the purchase price and confirmation of the SDLT paid. He made the central point clearly: for HMRC to accept that a property was “not suitable for use as a dwelling”, the condition must be genuinely severe.

In anonymised form, his reasoning was:

For HMRC to consider a property as not suitable for use as a dwelling, the condition must be genuinely severe.

He also explained that cases near the borderline are difficult because HMRC are taking a strict approach, especially after recent case law. On the figures provided, the possible tax difference was limited, which made the strength of the evidence even more important.

Nick’s questions were legally sensible because these claims usually turn on evidence of the condition at completion, not on what works were later carried out. Photos, survey reports, managing agent records, contractor reports and similar contemporaneous documents can be crucial.

The Law

SDLT on land transactions is governed by the Finance Act 2003. Whether property is taxed as residential or non-residential depends on the statutory definition of “residential property”.

Under section 116 Finance Act 2003, property is residential 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, and
• land that forms part of the garden or grounds of such a building.

If a building is not suitable for use as a dwelling at the effective date of the transaction, it may fall outside the residential definition, which can alter the SDLT treatment. In some cases, that means non-residential rates apply instead.

However, the phrase “suitable for use as a dwelling” has been considered in a number of cases, and the courts have repeatedly shown that the test is demanding. The question is not whether the property was attractive, modern, mortgageable, compliant with best practice, or easy to occupy. The question is whether, viewed realistically, it was suitable for use as a dwelling at the relevant date.

In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

There are several steps in analysing a case like this.

First, identify the legal test at the date of purchase. The relevant question is the property’s condition when the transaction became effective, usually completion. Later renovation works do not by themselves prove that the property was unsuitable as a dwelling at that earlier date.

Second, separate disrepair from true unsuitability. A missing kitchen and poor bathroom are relevant, but they do not automatically mean the property fails the dwelling test. Many older or run-down properties remain residential for SDLT purposes even if they need extensive refurbishment.

Third, consider access and structural safety. Unsafe stairs and movement in a supporting wall are more significant than cosmetic issues. If the only access to a first-floor flat was genuinely unsafe for normal human use, that may strengthen the argument that the flat was not suitable for use as a dwelling. But HMRC would usually expect convincing evidence, not just a later description from the buyer.

Fourth, consider the scale of the works. An estimated cost of around £13,000 on a low-value purchase shows meaningful disrepair, but cost alone is not decisive. A relatively modest repair bill can suggest the property was capable of being brought back into occupation without fundamental reconstruction. That may weaken an argument that it was outside the residential definition altogether.

Fifth, look at the evidence. In this scenario, there were photographs and a video said to have been taken around the relevant time, but no survey or third-party report because the buyer could not afford one. That does not make a claim impossible, but it does make it harder. Independent evidence often carries much more weight than a purchaser’s own account after the event.

Sixth, consider the SDLT figures. On a purchase price of £47,000 where the 3% higher rates applied, the SDLT paid would be £2,350 if treated as residential. If the property were instead treated as non-residential, the SDLT would generally be £0 at that price level. So the potential tax difference would be £2,350.

Seventh, apply the post-Mudan approach. The modern direction of travel is strict. Courts are less willing to accept that a property ceases to be residential simply because it lacks facilities or requires renovation. The threshold is now relatively high. A property usually needs to be in very serious condition, often with substantial objective evidence, before a non-residential argument becomes persuasive.

On these facts, the strongest point is likely to be the alleged unsafe access and structural movement affecting entry to the flat. The weaker points are the lack of a kitchen, an unusable bathroom and the fact that works were later completed by the owners themselves. Those features may show substantial disrepair, but not necessarily legal unsuitability as a dwelling.

Outcome

The practical conclusion is that this looks like a difficult and potentially borderline SDLT reclaim rather than a clearly strong one.

A flat with no kitchen, an unusable bathroom and poor internal condition does not automatically qualify as “not suitable for use as a dwelling”. The argument becomes stronger if the only means of access was genuinely unsafe and there was serious structural failure, but HMRC would normally expect good contemporaneous evidence of that condition.

In light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, readers should assume that the threshold for proving unsuitability is relatively high.

Practical Steps

If you are assessing a similar SDLT position, the following steps are sensible:

• Gather dated photographs and videos showing the property exactly as it was at completion.
• Find any survey, valuation, mortgage report, agent correspondence, contractor quotation or managing agent note prepared at or near the purchase date.
• Identify whether the problems were cosmetic, functional, structural or safety-related.
• Focus especially on whether there was safe access, sanitation, water, electricity and basic living capability at completion.
• Check the SDLT already paid and calculate the actual tax difference if non-residential treatment were correct.
• Review whether the evidence proves the condition at the effective date, not just after renovation started.
• Be realistic about borderline cases, because HMRC are likely to challenge weak or lightly evidenced claims.

If the only evidence is your own account and later repair works, the case may be hard to sustain. If there is strong independent evidence showing the property could not safely be occupied as a dwelling at completion, the position may be better.

Conclusion

A severely run-down flat does not automatically fall outside the residential SDLT rules. The legal question is whether it was suitable for use as a dwelling at the date of purchase, and that is now a demanding test. Missing facilities and refurbishment needs may not be enough on their own. Strong contemporaneous evidence, especially of serious safety or structural defects, is usually essential.

Legal References Used

• Finance Act 2003, section 116
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

See all questions and answers categorized in this sitemap. Or use Google site search below.