Can a company claim an SDLT refund for buying an uninhabitable probate property?

Introduction

Many buyers ask whether Stamp Duty Land Tax (SDLT) can be reclaimed where a property was in very poor condition when it was bought. This often comes up with probate properties, derelict houses and dwellings needing major works. The question usually turns on whether the property was “suitable for use as a dwelling” at the effective date of the transaction.

This area has been heavily disputed in recent years. Readers searching for an “SDLT refund for uninhabitable property” are usually trying to work out whether the purchase should have been taxed as residential property or non-residential property. That distinction can materially affect the SDLT paid. However, the legal threshold for saying a dwelling was not suitable for use is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer purchased a probate property through a company. The property was said to be in poor condition, and the buyer wanted to know whether a stamp duty refund claim might be possible and what would be needed to assess the case.

Nick’s Explanation

Nick’s response, in substance, was that these claims depend on evidence and on the legal test for whether the property was suitable for use as a dwelling at the time of purchase. He explained that the first step is usually to gather basic material such as photographs and details of the property’s condition so that an initial view can be taken.

He also explained that, at the time of the correspondence, much depended on the outcome of the Mudan appeal. In anonymised form, his point was:

“The issue is whether the property is judged by its original character as a dwelling, or by its actual condition at the date of purchase. If the property was too dangerous to live in and needed significant repair, there may be scope for arguing that it was not suitable for use as a dwelling.”

That was a fair summary of the argument being run in many refund claims. But the later Court of Appeal decision in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 means the bar is now high. A property does not fall outside the residential rules merely because it is run down, neglected, or in need of extensive renovation.

The Law

SDLT is charged under the Finance Act 2003. For these cases, the key question is whether the subject matter of the transaction included a building that was “used or suitable for use as a dwelling” or was in the process of being constructed or adapted for such use.

The main statutory provisions are found in:

• Finance Act 2003, section 55
• Finance Act 2003, section 116
• Finance Act 2003, Schedule 4ZA

Section 116 is especially important because it defines residential property for SDLT purposes. Broadly, property is residential if it consists of a building that is used or suitable for use as a dwelling, or 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, the buyer may argue that the purchase was not residential property. In the right case, that can affect the SDLT rate structure and may create grounds for an amendment or repayment claim.

However, the courts have repeatedly stressed that “suitable for use as a dwelling” is not the same as “ready for immediate occupation” or “in perfect condition”. A dwelling can still be suitable for use even if it is vacant, in disrepair, lacking modern fittings, or requires substantial works.

The modern leading authority is Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Following that decision, the condition threshold in uninhabitable or not suitable for use cases is now relatively high.

Analysis

The analysis usually works in stages.

First, identify the exact property acquired at completion. The test is applied at the effective date of the transaction, usually completion, not months later and not after renovation has started.

Second, ask whether the building was still a dwelling in character. If it was built and used as a house or flat, that is the starting point. A probate property will often still plainly be a dwelling even if it has been empty for some time.

Third, consider the actual physical condition at completion. Evidence matters. Relevant material may include:

• dated photographs and videos
• survey reports
• contract papers and auction particulars
• builder quotations
• local authority notices
• evidence of missing essentials such as sanitation, water, electricity or safe access
• evidence of structural danger, contamination, fire damage or severe collapse

Fourth, apply the legal threshold. This is where many claims fail. A property is not automatically outside the residential rules just because it had:

• old kitchens or bathrooms
• damp, mould or leaks
• damaged plaster or flooring
• outdated wiring or heating
• general neglect
• a need for refurbishment before comfortable occupation

After Mudan, the courts take a stricter view. The question is not whether the property was pleasant, mortgageable, or sensibly occupiable without works. The question is whether it had crossed the line so far that it was no longer suitable for use as a dwelling in the statutory sense.

That means the buyer usually needs evidence of something more serious, such as:

• conditions making occupation genuinely unsafe
• major structural failure
• destruction or severe damage affecting the essential nature of the dwelling
• absence of basic facilities to such an extent that the building cannot realistically function as a dwelling at all

Fifth, consider the fact that the buyer was a company. Company ownership does not itself prevent a claim about the residential or non-residential character of the property. But it may affect the SDLT profile in other ways, including the application of higher residential rates or, in some cases, the 15% rate in Schedule 4A if the statutory conditions are met. The precise impact depends on the transaction structure and the type of property acquired.

Sixth, consider time limits and procedural route. If too much time has passed since filing, the route may not be a simple amendment. The buyer may need to consider whether a repayment claim is still open and on what basis. This is highly fact-sensitive.

Outcome

The practical conclusion is that a refund claim may be possible in principle, but only if the evidence shows that the property was not suitable for use as a dwelling at the date of purchase. For most run-down probate properties, that is now a difficult argument after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

If the property was merely in poor repair or required renovation, that will often not be enough. If, however, the condition was so severe that the building had effectively ceased to be suitable for use as a dwelling, there may still be a viable argument.

Practical Steps

If you want to assess whether you may have a claim, the sensible next steps are:

• collect dated photographs showing the condition at completion
• obtain the survey, valuation and any builder or engineer reports
• gather the SDLT return, completion statement and contract papers
• identify exactly what was wrong with the property on the purchase date
• separate serious safety or structural issues from ordinary disrepair
• check the filing date and whether any amendment or repayment window remains open
• take advice on whether the facts reach the post-Mudan threshold

When reviewing the case, an adviser will usually want to see the property details and visual evidence first. That allows an initial view on whether the facts are strong enough to justify a technical analysis of the SDLT position.

Conclusion

Buying a probate property in poor condition does not automatically create an SDLT refund claim. The key issue is whether, at completion, the building was still suitable for use as a dwelling. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for proving that it was not suitable is relatively high. Strong contemporaneous evidence is essential.

Legal References Used

• Finance Act 2003, section 55
• Finance Act 2003, section 116
• Finance Act 2003, Schedule 4ZA
• 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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