Can you reclaim SDLT if a structurally damaged property was not suitable for use as a dwelling?

Introduction

Buyers sometimes ask whether Stamp Duty Land Tax (SDLT) was overpaid because the property they bought was in such poor condition that it was not suitable for use as a dwelling on the purchase date. This issue commonly arises where a building has major structural movement, water ingress, unsafe ceilings, failing masonry, or other defects that go beyond ordinary disrepair.

The question matters because residential SDLT rates generally apply only if the subject matter is a dwelling. If, at the effective date of the transaction, the building was not suitable for use as a dwelling, a different SDLT analysis may follow. However, 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 for around £165,500. After reviewing photographs and a structural report, serious defects appeared to exist, including substantial structural problems and signs of water-related deterioration. The buyer wanted to know whether there was a viable SDLT reclaim argument on the basis that the property was not suitable for use as a dwelling at the time of purchase.

A further issue then arose about timing. The purchase turned out to have taken place in 2021 rather than in a recent year, raising the question whether any SDLT claim was already out of time.

Nick’s Explanation

Nick’s view was that the condition evidence pointed to a potentially arguable “not suitable for use as a dwelling” case if the claim was still within the relevant time limit. He highlighted the importance of objective evidence such as a structural survey and repair material showing the extent of the defects.

He referred to the Court of Appeal’s guidance in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, especially paragraph 54(4):

“If [the necessary works] could not be carried out without prejudicing the structural integrity of the building (because, for instance, the walls might collapse) … the building is unlikely to be suitable for use as a dwelling.”

In anonymised form, Nick’s reasoning was that there may be an argument where:

• the property needed extensive structural repairs;
• there was evidence of water ingress, cracked masonry, defective mortar, failing plaster, or unsafe internal fabric;
• the building could not safely perform the ordinary functions of a dwelling without substantial works; and
• the defects were so serious that the property had lost the essential characteristics of a dwelling at the purchase date.

But he also identified a separate and decisive point: if the transaction took place in 2021, more than four years had elapsed, so the claim would be out of time.

The Law

SDLT is charged under the Finance Act 2003. Whether residential rates apply depends in part on whether the property includes a “dwelling” for SDLT purposes.

The key statutory provisions are in Schedule 4ZA to the Finance Act 2003, which deals with higher rates for additional dwellings but also contains the definition of “dwelling” used more widely in SDLT analysis. Paragraph 18 provides that a building counts as a dwelling if:

• it is used or suitable for use as a single dwelling, or
• it is in the process of being constructed or adapted for such use.

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

Case law has established that this is an objective test. The tribunal or court looks at the actual physical condition of the property at the relevant time. Prior use as a home is relevant, but it is not conclusive. Equally, mere disrepair, dated condition, or the need for renovation will not by themselves make a property unsuitable.

The current leading authority is Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The Court of Appeal made clear that the threshold is relatively high. A property is not rendered unsuitable simply because it is unpleasant, run-down, or in need of significant works. The defects must be such that, viewed realistically at the purchase date, the building cannot properly function as a dwelling.

Time limits also matter. Amendments to an SDLT return are generally subject to a 12-month amendment window from the filing date. There are also separate statutory provisions governing claims for overpayment relief, with strict time limits. In practice, a transaction from 2021 will often be outside the relevant period for obtaining a refund, depending on the procedural route being considered.

Analysis

The right way to analyse this kind of case is in stages.

1. Identify the condition of the property at the purchase date.

   The legal test focuses on the property’s actual state when the transaction completed. Photographs, structural reports, survey evidence, contractor opinions, and repair estimates are all important. Later deterioration is usually irrelevant unless it proves what the condition already was on completion.

2. Separate ordinary disrepair from true unsuitability.

   Many properties are bought in poor condition. Missing kitchens, outdated bathrooms, damp, cracked plaster, old wiring, or a leaking roof may justify renovation, but they do not automatically mean the property was not suitable for use as a dwelling. Following Mudan, the threshold is now relatively high in uninhabitable or not suitable for use cases.

3. Ask whether the defects prevented the building from functioning as a dwelling.

   The more persuasive cases tend to involve serious structural instability, collapse risk, or conditions making occupation unsafe in a fundamental sense. If necessary works could not be carried out without risking structural integrity, that strongly supports an argument of unsuitability, as noted in Mudan at paragraph 54(4).

4. Consider the specific defects alleged.

   Where there is evidence of lintel failure, unsafe ceilings, major roof or dormer defects, cracked masonry, defective mortar, extensive water ingress, and widespread internal failure, the case may move beyond simple disrepair. The question becomes whether these problems meant the building had lost the essential characteristics of a dwelling at the relevant date.

5. Check whether the claim is still in time.

   Even if the factual case is arguable, a time-bar can end the matter. That was the decisive point here. Once it became clear that the purchase was in 2021, the practical conclusion was that the SDLT reclaim route was no longer available because the relevant time limit had expired.

So, on the facts described, there were really two separate questions:

• Was there an arguable substantive case on suitability? Possibly yes, because the defects sounded unusually serious.
• Could the buyer still bring the claim? No, because the transaction date meant the matter was out of time.

Outcome

A severely defective property can sometimes support an SDLT reclaim argument on the basis that it was not suitable for use as a dwelling at completion. But the legal threshold is now demanding, especially after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

On these facts, the property may have had an arguable merits case if the purchase had been recent enough and supported by strong structural evidence. However, because the purchase took place in 2021, the claim was out of time. That means no SDLT reclaim could now be pursued through the usual routes.

Practical Steps

If you are assessing a similar SDLT issue, the main steps are:

• confirm the exact completion date and SDLT filing date;
• obtain the SDLT return and completion statement;
• collect contemporaneous evidence of condition, including surveys, structural reports, photographs, quotations, and contractor comments;
• focus on whether the defects were fundamental enough to make the building objectively unsuitable for use as a dwelling at completion;
• avoid relying only on the fact that the property needed refurbishment or had been empty;
• check the applicable claim or amendment deadline immediately; and
• compare the facts carefully against the Court of Appeal’s reasoning in Mudan, especially where structural integrity is in issue.

If the property was bought recently, timing may still allow an amendment or claim. If it was bought several years ago, the time limit may be the first issue to resolve before spending money on expert evidence.

Conclusion

A property with major structural defects may, in some cases, be treated as not suitable for use as a dwelling for SDLT purposes. But this is no longer an easy argument, because the courts now apply a relatively high threshold. And even a good factual case will fail if the claim is out of time. In this scenario, timing was the decisive obstacle.

Legal References Used

• Finance Act 2003
• Finance Act 2003, Schedule 4ZA, paragraph 18
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• Mudan, paragraph 54(4)

This page was last updated on 22 March 2026.

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