Can mould and failed double glazing make a property not suitable for use as a dwelling for SDLT?

Introduction

Buyers often ask whether defects found at or shortly after purchase mean a property was not suitable for use as a dwelling, so that Stamp Duty Land Tax may have been overpaid. This usually comes up where there is damp, mould, defective windows, water ingress, electrical problems or other repair issues.

The key point is that the legal test is now strict. A property does not become non-residential for SDLT just because it needs repair or modernisation. In an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A purchaser provided photographs and a survey showing mould hidden in a bedroom area and moisture trapped within bathroom double glazing. The purchaser was also arranging for replacement windows and asked whether the survey report and repair evidence might support an SDLT reclaim on the basis that the property was uninhabitable or not suitable for use as a dwelling at the effective date of the transaction.

Nick’s Explanation

Nick’s view was that, after reviewing the survey material and photographs, HMRC would be unlikely to accept that the property qualified for an SDLT refund on habitability grounds.

In anonymised form, his explanation was essentially this: recent case law has raised the bar for showing that a property was “not suitable for use as a dwelling”, and on the evidence provided the defects did not appear serious enough to meet that threshold.

That is a sensible conclusion. Mould behind a blind, condensation or water between panes of double glazing, and the fact that windows are being replaced will often show disrepair, but not necessarily a level of physical condition that prevents the building from functioning as a dwelling.

The Law

SDLT is charged under the Finance Act 2003. Whether property is residential depends on the statutory definition in section 116.

Broadly, a building is residential property if it is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use. The phrase “suitable for use as a dwelling” has generated substantial litigation.

The modern approach in the case law is that the test is concerned with the physical state of the property at the effective date of the transaction. The question is not whether the buyer intended to renovate, whether the property was unattractive, or whether repairs were commercially sensible. The question is whether, viewed objectively, the building was suitable for use as a dwelling on that date.

The courts have also made clear that:

• the test is not satisfied merely because a property needs work;
• serious disrepair is not always enough;
• many defects can be consistent with a building still being suitable for residential use;
• the threshold for proving unsuitability is relatively high.

In particular, Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 confirms that the threshold in these cases is now relatively demanding. The fact that a property has defects, even significant ones, does not automatically mean it is not suitable for use as a dwelling.

Analysis

To assess this kind of SDLT claim, it helps to work through the issue in stages.

First, identify the relevant date. The condition of the property must be tested at the effective date of the transaction, usually completion. Later deterioration or later works do not decide the issue, although contemporaneous evidence can help show the earlier condition.

Second, focus on the actual physical defects. Here, the reported issues were mould in part of a bedroom area and moisture or water trapped within bathroom double glazing, together with ongoing window replacement works.

Third, ask whether those defects mean the property could not reasonably function as a dwelling. In most cases, mould and failed sealed units in windows indicate disrepair and a need for remedial work. But they do not usually show that the property lacked the basic characteristics of a dwelling.

Fourth, consider whether the defects point to something more serious underneath, such as:

• major penetrating damp affecting core living accommodation;
• dangerous structural movement;
• unsafe electrics creating a genuine hazard preventing occupation;
• lack of basic sanitation, water, heating or kitchen facilities;
• conditions making ordinary residential occupation unrealistic.

On the facts described, there is no clear indication of that higher level of failure. Mould hidden behind a blind may be unpleasant and may suggest condensation, inadequate ventilation or local dampness, but by itself it is usually not enough. Likewise, water between panes of double glazing generally shows failed glazing units rather than a dwelling that is incapable of residential use.

Fifth, look at the evidence a tribunal or HMRC would expect. Useful evidence can include a survey, contractor reports, photographs from the purchase date, invoices, and expert opinions. But evidence of repair costs alone is not decisive. A property can require expensive works and still remain suitable for use as a dwelling in law.

Sixth, apply the current case law threshold. Following Mudan, the courts are less likely to accept arguments based on ordinary disrepair, damp, dated condition or repair needs unless the defects are so serious that the property genuinely fails the dwelling suitability test. On the material described here, HMRC would be likely to say the property remained residential.

Outcome

The practical conclusion is that mould in one area and failed double glazing, even if supported by a survey and followed by replacement windows, are unlikely on their own to make a property “not suitable for use as a dwelling” for SDLT purposes.

That means an SDLT reclaim based on uninhabitability would probably fail unless there is additional evidence of much more serious physical defects present at completion.

Practical Steps

If you are assessing a similar case, the sensible next steps are:

• obtain the survey that existed at or near completion;
• gather dated photographs and videos showing the condition at that time;
• identify whether any defect affected basic living functions such as sanitation, water, heating, cooking, weatherproofing or structural safety;
• check whether there was any expert report describing the property as unsafe or incapable of occupation at completion;
• separate ordinary repair or improvement works from defects that could genuinely prevent residential use;
• review the case specifically against the higher threshold confirmed in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

If the evidence shows only damp patches, mould, failed glazing, dated fittings or repair works, the claim is unlikely to succeed. If it shows severe structural failure, dangerous services, or absence of essential facilities, the position may be different.

Conclusion

Not every defective property is uninhabitable for SDLT purposes. A property can need substantial work and still be legally suitable for use as a dwelling. On facts limited to mould and failed double glazing, the better view is usually that the dwelling remains residential, and an SDLT reclaim is unlikely to be accepted.

Legal References Used

• Finance Act 2003, section 116
• 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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