Can you still claim SDLT relief for an uninhabitable property after the Mudan appeal failed?

Introduction

Many buyers search for this issue after purchasing a property that needed major work and then hearing that HMRC is rejecting most “uninhabitable property” SDLT claims. The position has become much stricter. In particular, the Court of Appeal decision in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 means the legal threshold for showing that a dwelling was not suitable for use as a dwelling is now relatively high.

The short answer is that the failed appeal does not automatically mean every claim is impossible. But it does mean that only a narrower group of cases is likely to succeed, and many claims based on disrepair, age, or refurbishment needs will now face serious difficulty.

The Question

A buyer asked for an update on HMRC’s approach to SDLT claims involving allegedly uninhabitable residential property. They had seen that HMRC was refusing such claims, that an appeal had been brought, and later that the appeal had been unsuccessful. They wanted to know whether that now meant they could no longer reclaim SDLT on the basis that the property was uninhabitable at the effective date of the transaction.

Nick’s Explanation

Nick’s core explanation was that HMRC had been refusing uninhabitable claims and that the appeal outcome needed to be watched closely. The practical point behind that response remains important: the answer depends on the current state of the law and on whether the facts of the property truly meet the legal test.

In anonymised form, Nick’s position can be summarised like this:

• HMRC has been taking a restrictive approach to uninhabitable property claims.
• An appeal was expected to clarify the law.
• Whether a buyer can still claim depends on whether the property meets the legal threshold as now interpreted by the courts.

That is the key issue after Mudan: not whether the property needed work in an ordinary sense, but whether it truly failed the statutory test at the relevant time.

The Law

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

For these disputes, the central question is often whether the property was “residential property” at the effective date of the transaction. 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.

If a building is so defective that it is not suitable for use as a dwelling at that date, a taxpayer may argue that it was not residential property for SDLT purposes. In the past, some buyers argued that serious disrepair, missing facilities, or unsafe conditions meant the building fell outside the residential regime.

However, the courts have increasingly applied that test strictly. The Court of Appeal in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 confirmed that the threshold is relatively high. A property is not taken outside the residential rules merely because it is run-down, in poor condition, inconvenient to occupy, or in need of substantial repair. The question is whether, viewed realistically and objectively at the effective date, it was suitable for use as a dwelling.

Analysis

To work out whether a claim is still viable, it helps to go step by step.

First, identify the exact condition of the property on the effective date of the transaction, usually completion. What matters is not what happened later during renovation, and not what the buyer intended to do, but the physical state of the dwelling at that time.

Second, separate serious defects from ordinary disrepair. A property may have outdated wiring, damp, a defective boiler, an old kitchen, damaged plaster, leaks, or a need for major refurbishment, yet still remain suitable for use as a dwelling in law. After Mudan, these facts alone are often not enough.

Third, ask whether the property had crossed the higher threshold of being genuinely unsuitable for use as a dwelling. Examples that may assist, depending on the evidence, include cases where the building lacked the basic character of a dwelling altogether or had defects so fundamental that occupation as a dwelling was not realistic at the effective date. Even then, the evidence must be strong.

Fourth, consider HMRC’s likely response. HMRC has been challenging these claims robustly. If the property still looked recognisably like a house or flat and could, in substance, be lived in, even if only after cleaning, repair, or modest reinstatement, HMRC is likely to say it remained residential property.

Fifth, apply the effect of Mudan. The failed appeal means the taxpayer-friendly argument has become harder, not easier. The condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. So a claim is not ruled out in every case, but only stronger fact patterns are likely to survive scrutiny.

In practical terms, if the claim is based on the property being old, neglected, mortgageable only with difficulty, missing some fixtures, or requiring extensive refurbishment, that is now much less likely to succeed. If the claim is based on truly fundamental defects supported by clear contemporaneous evidence, it may still be arguable.

Outcome

The practical conclusion is this: the unsuccessful appeal does not mean nobody can ever make an SDLT argument based on lack of suitability for use as a dwelling. But it does mean that many claims once thought arguable are now unlikely to succeed.

After Mudan, only cases with strong evidence of a genuinely non-suitable dwelling at the effective date are likely to have realistic prospects. For many buyers, the answer will now be that no reclaim is available on these facts.

Practical Steps

If you want to assess your own position, take these steps:

1. Obtain the completion date and confirm the SDLT filing position taken at the time.
2. Gather contemporaneous evidence from that date, including survey reports, valuation reports, photographs, lender correspondence, and contractor evidence.
3. Focus on the actual condition of the dwelling at completion, not later stripping-out works or renovation choices.
4. Ask whether the defects show mere disrepair or a true lack of suitability for use as a dwelling.
5. Review the facts against Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.
6. Check whether any amendment or repayment time limits under the Finance Act 2003 are still open.
7. If a claim has already been made and refused, review whether any appeal rights remain and whether the evidence is strong enough to justify continuing.

Conclusion

If you are asking whether the failed Mudan appeal means you can no longer claim SDLT relief for an uninhabitable property, the safest answer is: usually it makes the claim much harder, and in many ordinary refurbishment cases the answer will now be no. A claim may still be possible, but only where the property’s condition at completion meets a high legal threshold and the evidence is strong.

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.

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