Can you claim an SDLT refund if a property was not suitable for use as a dwelling?

Introduction

Many buyers ask whether they can reclaim Stamp Duty Land Tax (SDLT) because the property they bought was in poor condition. This issue usually arises where the buyer believes the dwelling was not habitable at the effective date of purchase and so should not have been taxed as residential property.

In practice, these claims are highly fact-sensitive. Evidence such as photographs, survey reports and conveyancing papers often matters a great deal. The legal threshold is also now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer wants to know whether they may have a valid SDLT refund claim on the basis that the property they purchased was not suitable for use as a dwelling at the time of completion. The buyer does not currently have all the documents to hand and may need their solicitor to provide the relevant papers. The key question is what evidence is needed and whether the condition of the property is serious enough to support a refund claim.

Nick’s Explanation

Nick’s response focused first on evidence. In anonymised form, his point was that before assessing a potential SDLT refund case, it is important to review materials such as photographs and any survey report relating to the property.

That approach reflects the reality of these cases. A claim that a property was not suitable for use as a dwelling cannot usually be judged from a short description alone. The condition of the building at the purchase date must be examined carefully, and contemporaneous evidence is often decisive.

In substance, the explanation is that the buyer should gather the available records, including anything held by the conveyancer or surveyor, so that the property’s condition at the relevant date can be analysed properly against the legal test.

The Law

SDLT is charged under the Finance Act 2003. Whether higher residential rates, standard residential rates or non-residential/mixed rates apply depends on the nature of the subject matter acquired at the effective date of the transaction.

For these purposes, an important question can be whether the property was “suitable for use as a dwelling” at that date. If a building is not suitable for use as a dwelling, it may fall outside the residential rules that would otherwise apply.

The case law has developed significantly in this area. The courts have made clear that the test is an objective one and that a property does not cease to be residential merely because it is dated, in disrepair, or requires renovation. The condition must be sufficiently serious that, viewed realistically, the building was not suitable for use as a dwelling at the effective date.

The threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That decision reinforces that ordinary defects, poor decorative condition, missing items, or a need for substantial works will not automatically make a property unsuitable for use as a dwelling. The question is whether the property had crossed the line from being a dwelling in poor condition into being genuinely unsuitable for use as one.

Analysis

The analysis usually proceeds in five steps.

First, identify the relevant date. For SDLT, the key date is normally the effective date of the transaction, usually completion. The property’s condition after completion is much less important unless it helps prove what the position was on that date.

Second, gather contemporaneous evidence. Useful evidence may include:

• survey reports;
• mortgage valuation reports;
• photographs or videos taken before or at completion;
• the legal pack and replies to enquiries;
• contract documentation;
• builder or engineer reports created around the transaction date;
• invoices or quotations showing urgent remedial works.

Third, separate serious habitability issues from ordinary disrepair. A property may still be suitable for use as a dwelling even if it has:

• old kitchens or bathrooms;
• damp or cosmetic damage;
• heating defects;
• electrical issues that need updating;
• water damage requiring repair;
• missing fixtures or poor internal condition.

These matters may show that the property needs work, but they do not necessarily show that it was not suitable for use as a dwelling.

Fourth, consider whether the defects were so fundamental that the property could not realistically be used as a dwelling at all. The stronger cases tend to involve very serious structural failure or conditions making occupation objectively unrealistic, not merely inconvenient or undesirable.

Fifth, assess whether the available evidence would be strong enough to satisfy HMRC, and if necessary a tribunal, that the legal threshold is met. Because the threshold is high, unsupported assertions from the buyer after the event are unlikely to be enough on their own.

Outcome

A buyer may have a possible SDLT refund claim if the property was genuinely not suitable for use as a dwelling at completion, but the bar is high. It is not enough that the property was run-down, in need of renovation, or expensive to repair. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition must usually be significantly more serious than ordinary disrepair.

In practical terms, the claim will usually stand or fall on the evidence. Photographs, survey reports and conveyancing records are often central to the analysis.

Practical Steps

If you are assessing this type of SDLT position, the sensible next steps are:

1. Obtain the survey report, valuation and any pre-purchase inspection documents.
2. Ask your solicitor for the conveyancing file, including property information forms, replies to enquiries and any documents showing the condition of the building.
3. Collect dated photographs or videos from around the completion date.
4. Prepare a clear timeline showing the property’s condition at completion and any immediate remedial works carried out afterwards.
5. Check whether the defects were truly fundamental, rather than simply showing that the property needed refurbishment.
6. Review the facts against the current case law, especially Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

If the evidence is incomplete, it is often worth obtaining the papers from the conveyancer or surveyor before reaching any conclusion.

Conclusion

An SDLT refund claim based on a property being unsuitable for use as a dwelling depends on the condition of the property at completion and the quality of the evidence. The legal test is strict, and after Mudan the threshold is relatively high. Most properties needing repair will still be treated as dwellings, so careful review of the documents is essential before assuming a refund is available.

Legal References Used

• Finance Act 2003
• 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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