Can you claim SDLT relief because a property was uninhabitable?

Introduction

Many buyers ask whether they can reduce or reclaim Stamp Duty Land Tax (SDLT) if the property they bought was in very poor condition. The usual argument is that the dwelling was not suitable for use as a residence at the effective date of the transaction, so residential SDLT rates should not have applied.

This issue has become much harder for taxpayers following recent case law. The courts now apply a relatively high threshold before a property will be treated as not suitable for use as a dwelling. Serious disrepair, dated condition, missing fittings, or the need for renovation will not usually be enough on their own.

The Question

A buyer wants to know whether the condition of a residential property at the time of purchase was bad enough to argue that it was not suitable for use as a dwelling for SDLT purposes. The concern is whether the buyer can amend the SDLT position or seek a refund on the basis that the property was effectively uninhabitable when acquired.

Nick’s Explanation

Nick’s view, in substance, is that these claims must now be approached cautiously. The key point is not whether the property needed work, but whether it truly failed the legal test of being suitable for use as a dwelling at the relevant date.

In anonymised form, his reasoning can be summarised like this:

“The question is whether the property was genuinely unsuitable for use as a dwelling at completion, not whether it was run-down or in need of repair. The courts now set the bar quite high, so many properties that look uninhabitable in everyday language will still count as dwellings for SDLT.”

That reflects the current legal position. A buyer must look closely at the actual condition on completion and the available evidence, rather than relying on broad descriptions such as derelict, unsafe, or unmortgageable.

The Law

SDLT is charged under the Finance Act 2003. Whether land is residential property is a central question because residential and non-residential rates differ.

Under section 116 Finance Act 2003, property is residential if it consists of or includes 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. The wording “suitable for use as a dwelling” has generated substantial litigation.

The courts have made clear that this is an objective test applied at the effective date of the transaction, usually completion. The issue is the physical state and character of the property at that time.

Important authorities include:

• Mudan and another v HMRC, first in the Upper Tribunal and then in the Court of Appeal as Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• PN Bewley Ltd v HMRC [2019] UKFTT 65 (TC)
• Fish Homes Ltd v HMRC [2020] UKUT 256 (TCC)

The more recent appellate guidance means the threshold for proving unsuitability is now relatively high. In an uninhabitable or not suitable for use case, that point must be stated clearly: the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

The correct approach is usually to work through the following steps.

First, identify the effective date of the transaction. The property’s condition must be tested at that date, not before and not after. Works carried out later do not prove the earlier SDLT treatment was wrong.

Second, ask whether the building was physically capable of residential use. This is a practical, objective question. Relevant matters may include whether the property had functioning basic services, weatherproofing, sanitation, access, and enough structural integrity to be lived in as a home.

Third, separate serious disrepair from legal unsuitability. A property may be in poor condition, may require major renovation, may lack modern kitchen or bathroom fittings, or may even be unattractive to lenders or insurers. Even so, it may still be suitable for use as a dwelling for SDLT purposes.

Fourth, test the evidence carefully. Useful evidence can include:

• survey reports prepared close to completion
• photographs dated to the transaction period
• contract papers and auction particulars
• invoices or schedules showing the state of essential services
• local authority records, if relevant
• witness evidence from people who saw the property at the time

Fifth, consider what the recent cases mean in practice. Earlier taxpayer successes encouraged many claims based on poor condition. But later decisions, especially Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, show that the courts are not asking whether the property was comfortable, modern, mortgageable, or ready for immediate occupation without work. The question is narrower and stricter: was it still suitable for use as a dwelling in substance?

That means a claim is less likely to succeed where the property still retained the basic character of a home, even if it was neglected, stripped out in part, or needed extensive refurbishment.

Outcome

The practical takeaway is that a buyer cannot assume that a run-down or even apparently uninhabitable property falls outside residential SDLT rates. The legal test is demanding, and recent authority has made these claims harder.

If the property still had the essential character and functionality of a dwelling at completion, HMRC is likely to treat it as residential property. A refund claim based only on poor condition or renovation needs may therefore be weak.

Practical Steps

If you are assessing this issue, the sensible next steps are:

• pin down the exact completion date
• gather all contemporaneous evidence of the property’s condition on that date
• focus on objective physical defects, not general descriptions
• check whether the building lacked essential features needed for residential occupation
• compare the facts against the current case law, especially Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• review whether an SDLT amendment or repayment claim is still in time

Where the evidence is borderline, the recent authorities mean it is important to be realistic about prospects. Many claims that might once have seemed arguable are now much less likely to succeed.

Conclusion

A property does not stop being residential for SDLT just because it is in bad condition. The question is whether it was objectively suitable for use as a dwelling at completion. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for showing that it was not suitable is now relatively high.

Legal References Used

• Finance Act 2003, section 116
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• Mudan and another v HMRC
• PN Bewley Ltd v HMRC [2019] UKFTT 65 (TC)
• Fish Homes Ltd v HMRC [2020] UKUT 256 (TCC)

This page was last updated on 22 March 2026.

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