Can you get an SDLT refund if a property was uninhabitable when you bought it?

Introduction

Many buyers ask whether they can reclaim Stamp Duty Land Tax (SDLT) if the property they bought was in very poor condition at completion. This usually comes up where the dwelling had serious defects such as damp, leaks, unsafe gas, failed heating, infestation, broken glazing or other urgent repair issues.

The key point is that SDLT treatment does not depend simply on whether a property needed substantial work. The legal question is whether, at the effective date of the transaction, the building was suitable for use as a dwelling. That is now a difficult threshold to meet. In particular, the condition test is relatively strict following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer purchased a residential property and later considered whether an SDLT refund might be available on the basis that the dwelling was allegedly uninhabitable at completion. The reported issues included severe damp, a broken window, rodent infestation, a non-functioning heating system requiring boiler replacement, a gas leak, internal water leaks and a cracked glass ceiling panel in the kitchen. The buyer also obtained a builder’s report and invoices for remedial works.

The question is whether problems of that kind are enough to show that the property was not suitable for use as a dwelling for SDLT purposes, and what evidence would be needed.

Nick’s Explanation

Nick’s core view was that claims of this type face real difficulty under current case law. In anonymised form, his explanation was that HMRC is unlikely to accept most “uninhabitable” SDLT claims unless the facts are unusually strong or the law changes in the taxpayer’s favour.

He explained, in substance, that recent authority means HMRC will not generally repay SDLT merely because a property had significant disrepair, safety defects or expensive repair needs. Instead, the property condition must cross a high legal threshold before it stops being treated as residential property suitable for use as a dwelling.

He also indicated that reports and invoices can still be useful, particularly where a buyer is trying to preserve a potentially arguable case, but the existence of repair documents does not by itself prove that the legal test is met.

The Law

SDLT is charged under the Finance Act 2003. Whether the residential rates apply depends in part on whether the subject matter of the transaction consists of residential property.

For these purposes, 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. The issue in many refund arguments is whether the property was suitable for use as a dwelling at the effective date of the purchase.

That question has been considered in tribunal and court decisions. The modern approach is not satisfied simply because a buyer would not want to move in immediately, or because the property required major works. A dwelling can still be “suitable for use” even if it is unpleasant, outdated, in disrepair or temporarily unsafe in some respects.

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. The focus is on suitability as a dwelling in a practical and objective sense at the time of completion. Serious defects matter, but not every combination of defects will mean the property ceases to be a dwelling for SDLT purposes.

Analysis

When applying the rules, it helps to work through the issue step by step.

First, identify the relevant date. For SDLT, the condition of the property is judged at the effective date of the transaction, usually completion. Later works and later deterioration are not the test, although they may help evidence the earlier condition.

Second, separate “needs repair” from “not suitable for use as a dwelling”. That distinction is crucial. A property may have severe damp, plumbing faults, broken glazing, infestation or failed heating and still remain a dwelling for SDLT purposes if, viewed objectively, it retains the basic character and functionality of a home.

Third, consider the nature of each defect:

• Severe damp may show poor condition, but damp alone often does not make a property unsuitable as a dwelling.
• A broken window may affect security and insulation, but one broken window will rarely be enough on its own.
• Rodent infestation is unpleasant and may require treatment, but infestation does not automatically prevent a building from being a dwelling.
• A failed boiler or non-operational central heating may be serious, especially in winter, but lack of heating is not necessarily decisive.
• A gas leak is potentially important because it raises immediate safety concerns, but the legal question remains whether the dwelling as a whole had crossed the line into unsuitability for use.
• Water leaks and urgent plumbing repairs may indicate substantial disrepair, but many leaking properties are still treated as dwellings.
• A cracked glass ceiling panel may support the wider picture, but is unlikely to be determinative unless it created a serious and immediate danger affecting habitability overall.

Fourth, look at the cumulative picture. The buyer’s best argument is usually not that one individual defect was enough, but that all the defects together meant the property could not reasonably be occupied as a home at completion. Even so, after Mudan, tribunals and HMRC are likely to ask whether the property still retained the essential nature of a dwelling despite those problems.

Fifth, examine the evidence. Helpful documents may include:

• a survey, snagging report or builder’s report describing the condition at completion;
• dated photographs and videos;
• gas safety reports, emergency call-out records or engineer reports;
• plumber, electrician or heating engineer invoices;
• evidence that occupation was impossible or unsafe immediately after completion;
• contemporaneous correspondence showing the seriousness of the defects.

However, repair invoices mainly prove that work was done. They do not necessarily prove that the property was legally uninhabitable at the relevant date. The strongest evidence is usually contemporaneous expert evidence directly addressing whether the dwelling could realistically be occupied as a home on completion.

Finally, consider current HMRC practice. In light of the recent authorities, HMRC is likely to resist repayment claims unless the facts are very strong. Cases involving disrepair alone, even substantial disrepair, now face a difficult path.

Outcome

On facts like these, a successful SDLT refund claim is far from straightforward. The defects described are serious and may have required urgent and expensive remedial works. But under the current law, that does not automatically mean the property was not suitable for use as a dwelling.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition threshold in uninhabitable or not suitable for use cases is relatively high. A property can still count as residential even where there is damp, infestation, broken glazing, failed heating, gas problems and leaks. Much will depend on whether the evidence shows that, at completion, the property had truly ceased to function as a dwelling in any real sense.

Practical Steps

If you are assessing a possible claim, the practical steps are:

1. Confirm the completion date and whether any amendment or repayment time limit is still open.
2. Gather all contemporaneous evidence from around completion, not just later invoices.
3. Obtain expert evidence that addresses habitability at the relevant date, not merely the scope and cost of repairs.
4. Review whether the property was actually capable of occupation, even on a basic or temporary basis.
5. Check whether the defects were localised and repairable, or whether they affected the whole dwelling so fundamentally that it could not function as a home.
6. Compare the facts carefully against current case law, especially Mudan.
7. If a claim is still arguable, prepare a structured submission focused on the legal test of suitability for use as a dwelling.

Conclusion

A property in poor or even dangerous condition is not automatically “uninhabitable” for SDLT purposes. The legal threshold is now relatively high, especially after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Buyers with evidence of serious defects may still wish to assess their position carefully, but they should do so on the basis of the strict statutory test and the current case law rather than on repair cost alone.

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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