Can you claim an SDLT refund because a property was uninhabitable when you bought it?

Introduction

Many buyers assume that if a house needs major works, it must count as “uninhabitable” for Stamp Duty Land Tax purposes. That is often not the case. In SDLT law, the question is not whether the property is dated, defective or in need of refurbishment. The real question is whether, on the effective date of the transaction, the building was suitable for use as a dwelling.

This issue matters because a property that is not suitable for use as a dwelling may fall outside the normal residential SDLT rules. Buyers therefore often ask whether defects such as leaks, unsafe electrics, rotten floors, overgrown gardens, missing kitchens or asbestos risks are enough to support a reclaim.

The short answer is that the threshold is high, and it is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer purchased a residential property and wanted to know whether an SDLT refund might be available on the basis that the property was uninhabitable at completion.

The reported issues included an overgrown garden, a badly bowed suspended floor in one room, a roof leak affecting a bedroom, likely electrical problems, possible asbestos-containing materials, and the need for extensive works including heating, plastering, window repairs or replacement, and a new kitchen and bathroom.

The buyer also wanted to know what evidence would be needed, whether an inspection would help, and how strong a claim might be.

Nick’s Explanation

Nick’s view was cautious. In substance, he explained that HMRC would be unlikely to accept that the property was “not suitable for use as a dwelling” on the facts described, so the claim did not appear strong.

His key point was that extensive repair works do not automatically make a property uninhabitable for SDLT purposes. A dwelling can still be suitable for use as a dwelling even if it is in poor condition, needs modernisation, or requires substantial expenditure after purchase.

He also noted that the strength of these claims had already become difficult, and that the case law was developing. That caution has since been reinforced by the Court of Appeal in Mudan, which confirms that the legal test is demanding.

The Law

SDLT is charged under the Finance Act 2003. Whether the residential rates apply depends in part on whether the subject matter 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 key provision is Schedule 4ZA to the Finance Act 2003, which uses the concept of a building that is “suitable for use as a dwelling”. The same wording has also been central to disputes about whether a property should be treated as residential property more generally.

The legal question is decided at the effective date of the transaction, usually completion. The tribunal or court asks whether the property, viewed realistically and objectively at that date, was suitable for use as a dwelling.

That does not mean the property must be comfortable, modern, attractive or immediately ready for long-term occupation without any work. Nor does it mean that every defect makes the building unsuitable. Many older or neglected houses remain dwellings in law even if they need serious repair.

The Court of Appeal in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 confirmed that the threshold for showing unsuitability is relatively high. The case makes clear that disrepair, missing items, and the need for renovation will not by themselves be enough unless the defects go so far that the building is not suitable for use as a dwelling at all.

Analysis

Applying those rules step by step, the buyer’s proposed claim looks difficult.

First, an overgrown garden will rarely matter much. External neglect may affect value and appearance, but it usually does not stop the building itself being suitable for use as a dwelling.

Second, a bowed or defective floor in one room may be serious, but the legal question is whether the dwelling as a whole was unsuitable for use. If the problem is localised and the house can still function as a residence, HMRC is unlikely to accept that this takes the property over the line.

Third, a roof leak affecting one bedroom is relevant evidence of disrepair, but again it does not automatically prove legal unsuitability. Many properties with leaks are still treated as dwellings for SDLT purposes unless the damage is so severe that occupation as a dwelling is not realistically possible.

Fourth, uncertainty about the electrics is usually weak evidence unless there is clear proof of a dangerous or unusable installation at completion. A suspicion that a rewire may be needed is not the same as evidence that the property was not suitable for use as a dwelling on the completion date.

Fifth, possible asbestos is also not enough on its own. The mere presence or suspected presence of asbestos-containing materials is common in older buildings. What matters is whether there was a condition at completion that made the dwelling unsuitable for residential use. Without a survey showing a severe and immediate problem, this point usually carries limited weight.

Sixth, the need for a new kitchen, bathroom, heating system, plastering, decoration and window repairs often describes a refurbishment project, not an uninhabitable building in the SDLT sense. A house can require all of those works and still remain a dwelling for tax purposes.

Seventh, evidence such as photographs, contractor reports, surveys and inspection notes can help, but evidence only helps if the underlying facts meet the legal test. Strong evidence of ordinary disrepair does not turn a weak legal case into a strong one.

After Mudan, the courts have made clear that the condition thresholds are now relatively high in uninhabitable or not suitable for use cases. The focus is not on whether the buyer intended to carry out major works, or whether the property was unpleasant, unsafe in some respects, or expensive to fix. The focus is whether the building had, by the completion date, ceased to be suitable for use as a dwelling.

On the facts described here, the defects point much more towards a property in poor condition requiring renovation than towards a building that had crossed that higher threshold.

Outcome

The practical conclusion is that a claim for an SDLT refund on “uninhabitable” grounds would be unlikely to be strong on these facts.

A neglected garden, a leaking roof, a defective floor, likely rewiring, possible asbestos, and the need for a new kitchen, bathroom and heating system will often be treated as repair and refurbishment issues rather than proof that the property was not suitable for use as a dwelling at completion.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the bar is relatively high, and many cases of serious disrepair will still fail.

Practical Steps

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

• identify the exact condition of the property on the completion date, not after works began;
• collect dated evidence, such as photographs, survey reports, contractor assessments, and any lender or insurer comments;
• separate cosmetic issues and refurbishment plans from defects that may have made occupation genuinely impossible or legally unsafe;
• check whether essential living functions were actually absent or unusable at completion, such as sanitation, water, basic weatherproofing, or structural integrity;
• consider whether the defects affected only part of the building or the dwelling as a whole;
• review the position in light of Mudan, which sets a demanding standard for proving unsuitability;
• take specialist SDLT advice before submitting an amendment or reclaim, especially if the case relies on “not suitable for use as a dwelling” arguments.

If a claim is made, it should be based on the legal test and supported by contemporaneous evidence. A general building project, even an expensive one, is not enough by itself.

Conclusion

Needing extensive renovation does not automatically mean a property was uninhabitable for SDLT purposes. The legal test is whether the building was suitable for use as a dwelling at completion, and that threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. On facts like these, HMRC would be likely to view the property as a dwelling in poor condition, not as one that falls outside the residential SDLT rules.

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.

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