Can you claim an SDLT refund if a property had an Emergency Prohibition Order at purchase?

Introduction

Buyers sometimes ask whether they can recover Stamp Duty Land Tax (SDLT) where a property looked like a house or flat, but was in such poor condition that it was not really capable of being used as a dwelling on the effective date of the transaction. A common version of this question arises where the local authority has served an Emergency Prohibition Order.

This matters because residential SDLT rates apply to purchases of dwellings, while different treatment may apply if the building was not suitable for use as a dwelling at the relevant time. The issue is highly fact-sensitive, and the legal 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-looking property and later asked whether an SDLT refund claim was possible because, at completion, the property was subject to an Emergency Prohibition Order. The order said the dwelling could not be used immediately because of serious hazards. The buyer wanted to know whether that combination of physical condition and legal restriction meant the property was not suitable for use as a dwelling at the time of purchase.

Nick’s Explanation

Nick’s view was that this type of case can still be strong, even after Mudan, if the facts go beyond ordinary disrepair.

In anonymised form, his reasoning was:

• the Court of Appeal in Mudan made these claims harder, because a very run-down property was still held to be suitable for use as a dwelling;
• however, a case may be distinguishable where the property is not merely dilapidated but affected by serious structural failure;
• a formal legal prohibition on occupation is also relevant, particularly where the order prohibits use with immediate effect because of an imminent risk of serious harm;
• where structural collapse risks are combined with missing basic services or severe sanitation problems, there is a stronger argument that the building had lost its essential character as a dwelling.

Nick explained, in substance, that the key difference from Mudan was not just poor condition, but the combination of serious physical defects and a legal bar on residential use.

The Law

SDLT is charged under the Finance Act 2003. Whether property is residential depends in part on whether it consists of or includes a dwelling. The legislation does not simply ask how the building is described in estate agent particulars or at the Land Registry. The real question is whether, at the effective date of the transaction, the property was suitable for use as a dwelling.

The leading authorities have developed the following broad points:

• the test is applied at the effective date of the transaction, usually completion;
• the question is one of suitability for use as a dwelling, not whether the purchaser intended to renovate it;
• disrepair alone will often not be enough;
• the court looks at the property as it actually stood, including physical condition and potentially relevant legal restrictions on occupation or use.

In HMRC v Ridgway, the courts recognised that legal restrictions can be relevant to the dwelling analysis. More recently, Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 confirmed that the threshold for showing a property was not suitable for use as a dwelling is relatively high. A building may still count as a dwelling even if it is in very poor condition and needs substantial works.

Analysis

The correct approach is to work through the facts step by step.

1. Identify the relevant date.

   The condition must be tested at the effective date of the transaction, not after later stripping out, demolition, or refurbishment.

2. Consider the physical state of the property.

   If the property merely needed modernisation, redecoration, a new kitchen, a new bathroom, or repairs to services, that will usually not be enough after Mudan. The courts now expect something more serious.

3. Ask whether the defects go to the basic function of a dwelling.

   Evidence of structural instability, collapse risk, dangerous ceilings, major water ingress, lack of sanitation, or absence of essential utilities may support the argument. The stronger cases are those where the defects are fundamental rather than cosmetic.

4. Consider any legal restriction on use.

   An Emergency Prohibition Order is important because it is not just evidence of poor condition. It is a formal public law measure preventing occupation or use due to serious danger. That can materially strengthen the argument.

5. Look at the overall picture.

   No single defect always decides the issue. The question is whether, taking everything together, the building had ceased to be suitable for use as a dwelling. After Mudan, the condition threshold is relatively high, so the evidence needs to show more than a run-down or unpleasant house.

On facts of the kind described here, the strongest points are usually:

• a local authority order prohibiting occupation with immediate effect;
• a finding of imminent risk of serious harm;
• Category 1 hazards;
• evidence of structural collapse or falling elements;
• lack of working heating, water, or sanitation;
• conditions showing the property was not realistically capable of normal residential use at completion.

That said, readers should be careful not to assume that every prohibition order will automatically succeed. The courts will still examine the actual nature of the defects and whether the building retained the essential characteristics of a dwelling despite them.

Outcome

Where a property was subject to an Emergency Prohibition Order at completion, and the order was based on serious hazards such as structural collapse risk together with failed basic services or severe sanitation issues, there may be a credible argument that the property was not suitable for use as a dwelling at the effective date of purchase.

However, because of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is now relatively high. Ordinary disrepair, even extensive disrepair, is often not enough. The better claims are those involving both fundamental physical failure and a clear legal prohibition on occupation.

Practical Steps

If you are assessing this kind of SDLT position, gather the evidence in a structured way:

• the Emergency Prohibition Order or other local authority notice;
• inspection reports identifying Category 1 hazards;
• photographs and videos showing the condition at completion;
• completion statements, contract, transfer, and SDLT filing documents;
• builder, surveyor, environmental health, or engineer reports dated close to completion;
• evidence about lack of heating, water, electricity, or sanitation at the relevant date;
• any evidence showing the property could not lawfully be occupied.

Then ask these questions:

1. What exactly was wrong with the property on completion?
2. Were the defects fundamental rather than merely expensive to fix?
3. Was there a legal restriction preventing occupation or use?
4. Does the evidence clearly pre-date or match the effective date of the transaction?
5. Can the facts be distinguished from Mudan?

If a refund claim is made, the buyer should also keep in mind that HMRC may enquire into the amendment or repayment claim and ask for detailed evidence.

Conclusion

An Emergency Prohibition Order can be powerful evidence in an SDLT refund case, but it is not a shortcut. The key question remains whether the property was actually not suitable for use as a dwelling at completion. After Mudan, that is a demanding test, so the claim is strongest where there is both a formal legal prohibition and serious defects going to the property’s basic residential function.

Legal References Used

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

This page was last updated on 22 March 2026.

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