Can you claim an SDLT refund for an uninhabitable property after the 2025 Court of Appeal decision?

Introduction

Many buyers ask whether they can recover Stamp Duty Land Tax (SDLT) if the property they bought was in such poor condition that it could not properly be used as a dwelling on the effective date of the transaction. This issue has been heavily disputed in recent years. A number of claims were rejected after a restrictive 2024 ruling, but the legal position has since been reconsidered by the Court of Appeal.

The key point for readers is that the threshold for saying a dwelling was not suitable for use is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Serious disrepair alone will often not be enough. The condition must usually be so severe that, viewed realistically at the date of purchase, the building could not be used as a dwelling.

The Question

A common question is this: a buyer purchased a residential property that had major defects at completion, such as missing or unsafe services, substantial roof failure, severe damp, contamination, infestation, or official restrictions on occupation. The buyer wants to know whether that condition means the property was not suitable for use as a dwelling, so that the SDLT treatment should be revisited and a refund claim considered.

Related questions often include:

• Does the absence of water, electricity, heating or hot water make a property uninhabitable for SDLT purposes?
• Is a leaking or damaged roof enough?
• What if there was asbestos, infestation, or a prohibition notice?
• Can evidence gathered earlier still be used for a claim?
• What is the time limit for amending or reclaiming SDLT?

Nick’s Explanation

Nick’s explanation, put into general terms, was that there had been an important development in the law and that buyers with severe condition issues may wish to prepare evidence promptly. He highlighted examples such as a missing roof, no working services, or legal restrictions on occupation as the sort of facts that could matter.

He also stressed two practical points. First, timing matters because SDLT repayment claims are subject to strict deadlines. Secondly, evidence matters because HMRC is likely to examine these cases closely. In one anonymised reply, Nick made the point that a buyer needs more than assertions and should gather corroborating material such as photographs, surveys, and other records showing that the property was unsuitable for use as a dwelling at the relevant date.

That is the right practical approach. The legal test is not satisfied simply because a property was run-down, inconvenient, expensive to repair, or bought for renovation. The evidence must show that the dwelling crossed the legal threshold at completion.

The Law

SDLT is charged under the Finance Act 2003. Whether property is taxed as residential or non-residential depends on the statutory definition of “residential property” in section 116.

Broadly, a building counts as 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. Disputes arise where a building was once a house or flat, but by the effective date of the transaction had fallen into very poor condition.

The leading modern authority is Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That Court of Appeal decision makes clear that the test for “suitable for use as a dwelling” is a demanding one. The court did not accept that ordinary disrepair, even serious disrepair, automatically takes a property outside the residential rules. The question is whether the building remained suitable for use as a dwelling in the real world at the relevant date.

In practice, the authorities show that the tribunal or court will look closely at the actual condition of the property at completion, not what the buyer planned to do with it afterwards and not simply whether mortgage lenders, insurers, or surveyors were cautious about it.

Analysis

The analysis usually works in the following steps.

First, identify the exact state of the property on the effective date of the transaction. Later deterioration is irrelevant, and later improvements do not help except as evidence of what the condition was at completion.

Secondly, separate serious disrepair from true unsuitability for use as a dwelling. A property may need a new kitchen, rewiring, damp treatment, a replacement boiler, plastering, windows, or roof repairs and still remain a dwelling for SDLT purposes. After Mudan, the threshold is relatively high.

Thirdly, consider whether the defects affected the basic ability to live there as a dwelling. Factors that may support a claim include:

• a wholly or substantially missing roof, or structural failure making occupation unsafe;
• absence of essential services in a way that makes occupation unrealistic, especially if combined with other major defects;
• an official prohibition notice or other legal restriction preventing residential occupation;
• conditions creating immediate health or safety risks of a severe kind;
• evidence that the property was effectively incapable of normal habitation at the purchase date.

Fourthly, look at the whole picture rather than one defect in isolation. For example, no heating or hot water may be uncomfortable and expensive to remedy, but on its own it will not always mean the building was unsuitable for use as a dwelling. Likewise, a leaking roof or damp problem may or may not cross the line depending on scale and consequences.

Fifthly, test the evidence. Strong evidence may include:

• dated photographs and videos taken before or at completion;
• RICS surveys, structural reports, electrical reports, and gas or plumbing reports;
• local authority notices, environmental health records, or prohibition notices;
• contract papers, auction packs, and special conditions describing the state of the property;
• builder quotations and schedules of works prepared close to completion;
• correspondence showing key services were absent or unsafe;
• evidence of contamination, infestation, or dangerous materials where this affected habitability.

Sixthly, check the procedural route and time limit. In England, an SDLT amendment or repayment claim will commonly need attention within four years of the effective date, though the exact route depends on the procedural posture of the case. In Scotland, the equivalent LBTT rules differ, and the period commonly referred to is five years. The time limit should always be checked carefully against the specific facts.

Finally, apply the post-Mudan threshold realistically. Some examples:

• If a property merely had a failed boiler, no central heating, or no hot water, that may be insufficient on its own.
• If the roof was leaking but still present and the house remained structurally enclosed, that may still be insufficient.
• If there was no running water, no electricity, major roof failure, contamination, infestation, and evidence that occupation was unsafe or prohibited, the case is stronger.
• If a large part of the roof was missing or there was an official bar on living there, that is more likely to support an argument that the building was not suitable for use as a dwelling.

Outcome

The practical conclusion is that some buyers may still have a viable SDLT refund argument where the property was in an extreme condition at completion. However, the bar is now high. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, many properties that are shabby, dilapidated, or in need of major renovation will still be treated as residential dwellings for SDLT purposes.

A claim is most likely to be worth exploring where the property had very severe defects affecting the basic ability to live there, especially where those defects are backed by clear contemporaneous evidence.

Practical Steps

If you are assessing your own position, the sensible next steps are:

1. Confirm the completion date and calculate the SDLT time limit immediately.
2. Gather all contemporaneous evidence from the purchase period, including photographs, surveys, reports, quotations, and correspondence.
3. Prepare a short factual chronology showing the property’s condition on the effective date.
4. Identify whether the issue was mere disrepair or whether the property was genuinely incapable of use as a dwelling.
5. Check whether there were any official restrictions, notices, or safety findings affecting occupation.
6. Compare the facts against the higher threshold now required after Mudan.
7. If a claim may be arguable, ensure the correct procedural step is taken before the deadline expires.

Conclusion

You cannot assume that a poor-condition property qualifies for an SDLT refund. The current legal position sets a relatively demanding test. The question is not whether the property needed substantial work, but whether, at completion, it was truly not suitable for use as a dwelling. Cases involving extreme defects, missing essentials, or legal barriers to occupation may still justify a claim, but careful evidence and prompt action are essential.

Legal References Used

• Finance Act 2003, especially 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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