Can you reclaim the higher rates of SDLT after 3 years if cladding and EWS1 issues delayed the sale of your previous home?

Introduction

Many homeowners pay the higher rates of Stamp Duty Land Tax (SDLT) when they buy a new main residence before selling their old one. Normally, they can reclaim the extra SDLT if they sell the old main residence within 3 years.

A common concern arises where the old flat could not realistically be sold because of building safety problems, cladding remediation delays, or an adverse EWS1 rating. Readers often ask whether HMRC can still allow a refund if the sale happens after the normal 3-year deadline.

The short answer is that HMRC can extend the deadline in cases involving exceptional circumstances. In the right case, building safety issues and mortgageability problems linked to an EWS1 rating may support that argument.

The Question

A couple bought a new home while still owning their previous flat, so they paid the higher rates of SDLT on the new purchase. They had expected to sell the flat, but the flat had an EWS1 rating that made mortgage lending difficult or impossible for many buyers. Remediation works were delayed, and there was uncertainty about when an updated EWS1 form would be available.

As the 3-year SDLT refund deadline approached, they wanted to know:

• whether they could still reclaim the higher rates if the flat was sold after the 3-year period,
• whether the cladding and EWS1 problems could count as exceptional circumstances, and
• when they should approach HMRC about the delay.

Nick’s Explanation

Nick’s view was that this is a strong candidate for the exceptional circumstances extension in Schedule 4ZA to the Finance Act 2003.

In anonymised form, his reasoning was:

“There is a strong argument that exceptional circumstances prevented the sale of the previous main residence within the normal 3-year period. Where a property could not realistically be sold because of an adverse EWS1 rating and related building safety issues outside the owners’ control, HMRC may accept that the delay was caused by unforeseeable exceptional circumstances.”

He also pointed to HMRC’s own guidance, especially SDLTM09807, which includes an example involving delayed sale of a flat pending remediation works and an updated EWS1 form.

Nick further explained that HMRC will generally consider the exceptional circumstances point when the previous main residence has actually been sold. The taxpayer must then show:

• what the exceptional circumstances were,
• why they could not reasonably have been foreseen,
• how they prevented the sale, and
• that the property was sold as soon as reasonably possible after those circumstances ended.

The Law

The higher rates of SDLT for additional dwellings are set out in Schedule 4ZA to the Finance Act 2003.

Where a person buys a new main residence before disposing of their previous one, the higher rates may apply at the time of purchase. A refund may later be available if the previous main residence is disposed of within the statutory period.

The key provision here is Schedule 4ZA, paragraph 3(7A) to (7B) of the Finance Act 2003. In broad terms, it allows the normal 3-year period to be extended if:

• the purchaser was prevented from disposing of the previous main residence before the end of that period because of exceptional circumstances beyond their control,
• those circumstances could not reasonably have been foreseen, and
• the sale took place as soon as reasonably practicable after those circumstances ceased.

HMRC’s guidance at SDLTM09807 discusses this extension and gives examples of circumstances that may qualify. One of those examples concerns a flat affected by building safety remediation and the need for an updated EWS1 form before a sale could proceed.

It is also important to distinguish this issue from the separate SDLT question of whether a property is suitable for use as a dwelling on the effective date of purchase. In uninhabitable or not suitable for use cases, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That case is relevant to dwelling suitability arguments, but the present issue is different: it concerns the refund time limit and exceptional circumstances affecting disposal of the former home.

Analysis

The analysis usually turns on four main questions.

First, was there genuinely an obstacle to sale?

If the flat had an EWS1 rating that caused mainstream lenders to refuse mortgages, or made the flat effectively unmortgageable for most buyers, that points strongly towards a real barrier to sale. A property does not have to be literally impossible to sell in every conceivable case, but there should be evidence that the market was seriously impaired in a practical sense.

Second, were the circumstances exceptional and outside the owners’ control?

Cladding remediation delays, building safety restrictions, access problems, third-party licensing delays, and the need for updated certification are all matters that are usually outside an ordinary homeowner’s control. Where the issue stems from wider building safety problems and external remediation timetables, that supports the exceptional circumstances argument.

Third, could the circumstances reasonably have been foreseen?

This is often the most sensitive point. HMRC may ask whether the owners knew, or should have known, at the time they bought the new home that the old flat might not be saleable within 3 years. The answer will depend on the facts. If the scale and duration of the remediation delay, or the continuing mortgage restrictions, were not reasonably predictable at that stage, that helps. The fact that the issue arose from wider national building safety problems and uncertain remediation timetables may support this part of the test.

Fourth, did the owners act as soon as reasonably possible once the obstacle eased?

This is essential. Even if exceptional circumstances existed, HMRC will still expect the owners to market and sell the flat promptly once the position improves. If remediation nears completion, lenders become more willing to lend, or an updated EWS1 form becomes available, the owners should move forward without avoidable delay.

That last point also explains why mixed evidence about marketability matters. If some buyers were able to proceed using alternative comfort letters or developer statements, HMRC may ask whether the flat could in fact have been sold earlier. That does not automatically defeat the claim, because isolated transactions do not necessarily show that the flat was reasonably saleable in the ordinary market. But it does mean the owners should gather evidence carefully.

Useful evidence may include:

• the EWS1 rating in force during the relevant period,
• correspondence showing remediation delays,
• communications from managing agents, developers or contractors about expected completion,
• evidence of lender reluctance or mortgage refusals,
• estate agent advice on marketability, and
• evidence that the property was listed or put on the market promptly once sale became realistic.

As for timing, HMRC normally deals with the refund claim after the previous main residence has been sold. The exceptional circumstances case is usually made as part of the refund application, not as a standalone advance clearance request before sale.

Outcome

Where a previous flat could not realistically be sold within 3 years because of cladding remediation delays and an adverse EWS1 position, there may be a good basis for claiming that exceptional circumstances extended the refund deadline.

On these kinds of facts, the practical conclusion is:

• a sale after the normal 3-year period can still potentially qualify for a refund,
• building safety and EWS1 issues may amount to exceptional circumstances, and
• the claim is usually made after the old home has actually been sold.

The strength of the claim will depend on the evidence showing that the owners were genuinely prevented from selling and then acted promptly once the barrier was lifted.

Practical Steps

If you are in this position, the sensible next steps are:

• gather all documents about the EWS1 rating, remediation works and delays,
• keep records showing why the flat was difficult to sell, especially any lender or estate agent evidence,
• market the property as soon as it is reasonably possible to do so,
• keep a clear timeline of events from purchase of the new home through to eventual sale of the old one, and
• once the old home is sold, submit the SDLT refund claim explaining the exceptional circumstances in detail.

The written explanation should address each statutory point directly: what happened, why it was outside your control, why it could not reasonably have been foreseen, how it prevented the sale, and why the sale took place as soon as reasonably practicable afterwards.

Conclusion

If cladding and EWS1 problems prevented the sale of your previous main residence, the 3-year SDLT refund deadline is not always the end of the matter. The legislation allows an extension where exceptional circumstances apply, and HMRC’s own guidance recognises that building safety remediation cases can qualify. The key is evidence and prompt action once the property becomes saleable.

Legal References Used

• Finance Act 2003, Schedule 4ZA, paragraph 3(7A) to (7B)
• HMRC Stamp Duty Land Tax Manual, SDLTM09807
• 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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