Can you make an SDLT refund claim for an uninhabitable property after the Mudan case?

Introduction

Many buyers have asked whether they can reclaim Stamp Duty Land Tax (SDLT) where a property was in very poor condition at the time of purchase. The issue usually arises where the buyer paid residential SDLT, sometimes including the higher rates for additional dwellings, and later argues that the building was not “suitable for use as a dwelling” on the effective date of the transaction.

This area has been heavily litigated. The courts have now made clear that the threshold for saying a property was not suitable for use as a dwelling is relatively high. In particular, following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, ordinary disrepair, even serious disrepair, will often not be enough.

The Question

A taxpayer previously considered making an SDLT refund claim on the basis that a purchased property was uninhabitable and so should have been treated as non-residential rather than residential. The taxpayer later asked whether there had been any further court developments and whether they were now eligible to submit the claim again to HMRC.

Nick’s Explanation

Nick’s short update was that there had been no material change at that stage and that the position still depended on the outcome of the appeal process. In his earlier fuller explanation, he said in substance that the key issue was whether the property was truly unsuitable for use as a dwelling because of its condition.

His explanation highlighted these points:

• the claim depends on the difference between residential and non-residential SDLT treatment;
• a property that genuinely cannot be used as a dwelling may fall outside residential rates;
• however, the courts were moving toward a narrow interpretation of when disrepair makes a property unsuitable for use as a dwelling;
• HMRC was likely to resist claims based only on poor condition or repair needs;
• timing matters, because an SDLT amendment or repayment claim may be affected by statutory time limits.

In anonymised form, Nick’s practical message was essentially: wait for the appellate position to become clear, check whether the claim is still within time, and do not assume that a property is non-residential merely because major works were needed.

The Law

SDLT is charged under the Finance Act 2003. Whether residential rates apply depends in part on whether the subject matter of the transaction consists of a dwelling or land that forms part of the garden or grounds of a dwelling.

The key statutory provisions are found in:

• Finance Act 2003, section 55;
• Finance Act 2003, section 116;
• Schedule 4ZA to the Finance Act 2003, where relevant to higher rates for additional dwellings.

Section 116(1) provides that “dwelling” includes a building or part of a building that is used or suitable for use as a single dwelling, or is in the process of being constructed or adapted for such use.

That wording has generated a series of cases on what “suitable for use as a dwelling” means. The courts have generally focused on the property’s objective nature and physical characteristics at the effective date of the transaction. The question is not simply whether the buyer wanted to move in immediately, whether the property was attractive, or whether repairs were commercially necessary.

The recent appellate authority is especially important. In Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the Court of Appeal confirmed that the threshold for showing that a building is not suitable for use as a dwelling is relatively high. A building does not cease to be a dwelling merely because it is run down, in poor repair, or requires substantial works. The condition usually has to go much further.

Analysis

To assess whether an SDLT reclaim is realistically available, the analysis usually works in the following order.

First, identify the effective date of the transaction. The property’s condition must be judged at that date, usually completion. Later deterioration or later discoveries do not change the legal character of the property on the relevant date.

Second, ask whether the building objectively retained the basic character of a dwelling. A property may still be a dwelling even if it has defective wiring, poor plumbing, damp, roof problems, outdated fittings, or requires major refurbishment.

Third, consider whether the defects were so fundamental that the building could not properly be described as suitable for use as a dwelling at all. After Mudan, this is a demanding test. The courts have indicated that the enquiry is not about comfort or immediate readiness for occupation in an everyday sense. It is about whether the building still has the essential nature of a dwelling.

Fourth, distinguish between:

• a property that is dilapidated but repairable and still recognisable as a dwelling; and
• a property whose condition is so extreme that it lacks the essential characteristics of a dwelling, or is effectively beyond reuse except by demolition or reconstruction.

That distinction is now critical. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, an “uninhabitable” argument will usually fail unless the facts are exceptional. The courts have set the bar relatively high. Serious disrepair alone is not enough. Even extensive remedial works may not prevent the building from being treated as residential for SDLT purposes.

Fifth, consider HMRC’s likely approach. HMRC has generally argued that many claims in this area wrongly equate disrepair with non-residential status. In light of the appellate case law, HMRC is likely to reject claims unless the evidence shows an extreme factual position.

Sixth, check the time limit. Whether a claim can still be made depends on the procedural route being used. In practice, timing can be decisive. A potentially arguable case may still fail if the statutory deadline has passed.

Outcome

The practical answer is that a buyer is not automatically eligible to submit an SDLT reclaim simply because the property was in poor condition. After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition threshold is relatively high. Most properties needing renovation, even major renovation, will still be treated as dwellings for SDLT purposes.

So, unless the property’s condition at completion was truly extreme, the chances of a successful “not suitable for use as a dwelling” claim are now much narrower than many buyers previously assumed.

Practical Steps

If you are assessing a possible claim, the sensible next steps are:

• check the completion date and confirm whether any claim or amendment is still within the relevant statutory time limit;
• gather contemporaneous evidence of condition, such as survey reports, photographs, contractor reports, mortgage valuation material and correspondence from the time of purchase;
• focus on the property’s actual physical state at completion, not on later refurbishment decisions;
• compare the facts carefully against the current case law, especially Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799;
• be realistic about whether the property was merely in disrepair or whether it genuinely lacked the essential characteristics of a dwelling;
• take advice on both the substantive SDLT issue and the claim procedure before submitting anything to HMRC.

Conclusion

The law now makes these claims harder. A property does not become non-residential for SDLT just because it was difficult to live in or needed substantial work. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, only unusually severe cases are likely to meet the test that the building was not suitable for use as a dwelling.

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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