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

Introduction

Buyers sometimes discover after completion that a residential property was in far worse condition than it first appeared. In some cases, the building is not merely in need of repair or refurbishment, but is so unsafe that it cannot lawfully or practically be lived in. That matters for Stamp Duty Land Tax because a property that is not suitable for use as a dwelling at the effective date of the transaction may fall outside the normal residential SDLT rules.

This issue often comes up where there are major structural defects, a risk of collapse, extensive propping, or reconstruction works that prevent occupation. The legal test is strict, and the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer acquired a multi-unit residential building for £440,000 and paid £22,000 in SDLT. At the time of purchase, the building appeared to need renovation. After completion, further investigation revealed serious structural instability and a risk of collapse. The building had to be propped internally and externally, and substantial reconstruction works were required. While those supports were in place, the building could not realistically be occupied.

The question is whether, in those circumstances, the buyer may have grounds to amend the SDLT return and argue that the property was not suitable for use as a dwelling at the effective date of the transaction.

Nick’s Explanation

Nick’s view was that this was a strong factual case because the defects went beyond ordinary disrepair. In anonymised form, his reasoning was that where a property is “too dangerous to occupy” and requires major reconstruction to make it safe, that can support the argument that it was not suitable for use as a dwelling for SDLT purposes.

He also emphasised the importance of evidence. The case would need to be supported by the transaction documents and by detailed material showing:

• what defects were known or visible at purchase;
• what more serious defects were discovered after completion;
• whether there was genuine structural instability or risk of collapse;
• whether internal and external propping was required;
• whether the building could in fact be occupied; and
• what reconstruction was needed to make it safe.

That approach reflects the way these claims are usually decided: not by labels such as “poor condition” or “needs renovation”, but by the actual physical condition of the property at the effective date of the transaction.

The Law

SDLT is charged under the Finance Act 2003. Whether property is taxed at residential or non-residential rates depends in part on whether the subject matter consists of a dwelling, or land that is part of a dwelling.

The key provisions are in Schedule 4ZA to the Finance Act 2003, which defines “dwelling” for SDLT purposes. Broadly, 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.

Where a building is so defective that it is not suitable for use as a dwelling at the effective date of the transaction, it may not be treated as residential property in the usual way.

The modern case law has focused closely on the meaning of “suitable for use as a dwelling”. The leading authority referred to here is Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The Court of Appeal confirmed that the test is demanding. A property does not cease to be a dwelling merely because it is dilapidated, inconvenient, or in need of substantial repair. The condition must be serious enough that, viewed realistically, the property is not suitable for use as a dwelling at the relevant date.

That means ordinary renovation projects usually do not qualify. The courts now require a high level of uninhabitability. Examples that may assist include cases involving real danger to occupants, severe structural failure, or conditions making occupation practically impossible.

Analysis

The correct analysis is to work through the facts as they stood on the effective date of the transaction, usually completion.

First, ask whether the property was residential in character on paper. A block of flats or other residential building will usually start from the position that it is a dwelling or contains dwellings.

Second, ask whether the physical condition was so serious that the building was not suitable for use as a dwelling at that date. This is the critical question. A buyer cannot succeed merely by showing:

• the building was run down;
• works were planned;
• the buyer intended redevelopment;
• there were defects needing repair; or
• the building was uncomfortable or unattractive.

Third, consider whether there was actual danger or practical impossibility of occupation. In this scenario, the reported facts point in that direction:

• serious structural instability was discovered;
• there was a risk of collapse;
• the whole building had to be propped internally and externally; and
• with those supports in place, the building could not be lived in.

Those facts are much stronger than a normal “needs refurbishment” case. If the evidence shows that the building was genuinely unsafe and required major reconstruction before anyone could safely occupy it, that can support the conclusion that it was not suitable for use as a dwelling.

Fourth, evidence must tie the serious condition back to the effective date. It is not enough to show that the building deteriorated later or that works were carried out after purchase. The buyer must show that the underlying structural condition already existed at completion, even if the full extent was only discovered afterwards.

Fifth, the buyer should expect HMRC to scrutinise the claim carefully. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, HMRC is likely to argue that many defective properties remain dwellings despite serious disrepair. So the claim is strongest where survey evidence, engineer reports, photographs, contractor evidence, and the nature of the emergency stabilisation works all point to a property that was actually dangerous and not realistically habitable.

Outcome

Where a property was structurally unsafe at completion, posed a real risk of collapse, required internal and external propping, and could not be occupied without major reconstruction, there may be a credible basis to argue that it was not suitable for use as a dwelling for SDLT purposes.

On those facts, a buyer may have grounds to amend the SDLT position and seek a refund based on the non-residential treatment of the transaction. However, success depends heavily on the quality of the evidence and on proving the condition at the effective date. The legal threshold is now relatively high.

Practical Steps

If you are assessing a similar SDLT reclaim, the following steps are usually important:

• obtain the SDLT5 certificate and a copy of the filed SDLT return;
• gather the sale contract, transfer or assignment deed, and completion statement;
• collect survey reports, structural engineer reports, contractor reports, and quotations;
• preserve dated photographs and videos showing the condition at or near completion;
• identify any emergency stabilisation measures, such as internal or external propping;
• record whether the property could lawfully and practically be occupied at completion;
• show what reconstruction was required before occupation became possible; and
• check the time limit for amending the SDLT return.

It is also sensible to prepare a clear chronology. That should explain what was known before completion, what was discovered afterwards, and why the later evidence proves the true condition at the effective date rather than a later change.

Conclusion

A property that merely needs renovation will usually still count as a dwelling for SDLT. But if the building was genuinely dangerous, structurally unstable, and incapable of occupation at completion, a reclaim may be possible. After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is high, so detailed factual and expert evidence is essential.

Legal References Used

• Finance Act 2003
• 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.

See all questions and answers categorized in this sitemap. Or use Google site search below.