Can you reclaim SDLT on a property bought with damp, roof defects or repair issues?

Introduction

Many buyers ask whether they can reclaim Stamp Duty Land Tax (SDLT) if a property was in poor condition when they bought it. A common argument is that the dwelling was not suitable for use as a residence at the effective date of the transaction, so it should not have been taxed as residential property in the normal way.

This issue often arises where a survey identified damp, roof defects, electrical problems or other repair works, and the buyer later spent money putting the property right. The key question is not whether the property needed work. The real question is whether, at completion, the condition was so serious that the building was not suitable for use as a dwelling.

That test is now applied quite strictly. In particular, in an uninhabitable or not suitable for use case, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer asked whether SDLT paid on two residential purchases could potentially be reclaimed. In each case, the property had defects recorded in survey material and repair documents. The issues included damp, roof-related works, and other remedial items such as electrical upgrades and general repairs.

The buyer had supporting paperwork including survey evidence, transaction documents and some repair or renovation invoices, and wanted to know whether those facts were enough to support an SDLT reclaim.

Nick’s Explanation

Nick’s view, in anonymised form, was that the starting point is always the documentary evidence at the date of purchase. He indicated that the key papers usually include:

• the signed TR1,
• the SDLT5,
• the signed sale contract, and
• the completion statement.

He also treated survey reports, photographs showing the condition at purchase, and invoices for remedial works as potentially relevant supporting evidence.

The substance of his explanation can be summarised like this: evidence of damp, roof works and repairs may help to build a case, but the legal test is whether the dwelling was actually unsuitable for use as a dwelling at the effective date of the transaction. The fact that works were later carried out does not by itself prove that the statutory test was met.

Put simply, repair needs and uninhabitable condition are not the same thing. A property can be in poor repair, need substantial expenditure, and still count as residential for SDLT purposes.

The Law

SDLT is charged under the Finance Act 2003. For this type of issue, the important distinction is between:

• property that is “residential property” for SDLT purposes, and
• property that is not residential because it was not suitable for use as a dwelling at the effective date of the transaction.

The main statutory provisions are found in Finance Act 2003, especially the 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. The argument in these cases is usually that, despite being a house or flat in form, the building was not suitable for use as a dwelling on completion because its condition was too poor.

The courts and tribunals have repeatedly said that this is a fact-sensitive test applied to the property’s condition at the effective date of the transaction. The buyer’s intended refurbishment, the price paid, or the fact that works were desirable or even substantial are not enough on their own.

The recent Court of Appeal decision in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 is particularly important. It confirms that the threshold for showing a dwelling was not suitable for use is relatively high. Ordinary disrepair, damp, outdated services, or the need for significant renovation will often not be enough unless the defects are so serious that the property genuinely could not function as a dwelling at completion.

Analysis

When looking at whether an SDLT reclaim is realistic in this type of case, it helps to work through the issue in stages.

First, identify the legal test correctly. The question is not:

• Did the property need repairs?
• Was the property unattractive to live in?
• Did the buyer spend a lot on works afterwards?

The real question is:

• Was the property suitable for use as a dwelling on the effective date of the purchase?

Second, look at the evidence from the time of purchase. The strongest material usually includes:

• the survey report,
• photographs showing the actual condition at completion,
• completion and contract papers,
• any retention or special conditions in the contract,
• invoices or quotations that explain the nature of urgent works, and
• where relevant, evidence that key facilities were missing or unusable.

Third, separate serious structural or functional defects from ordinary refurbishment items. Damp is a good example. Damp can range from cosmetic staining to severe penetrating or rising damp causing major health and habitability concerns. Likewise, roof works can range from routine maintenance to defects so serious that the property is not weather-tight. Electrical upgrading may simply reflect an old installation rather than a dwelling being incapable of residential use.

Fourth, ask whether the property had the basic characteristics of a dwelling at completion. Relevant matters can include whether it had:

• usable access,
• basic sanitation,
• water and power in a usable form,
• a functioning kitchen or bathroom,
• reasonable weather-tightness, and
• no defect making occupation practically impossible or unsafe in any ordinary sense.

Fifth, apply the high threshold now confirmed by Mudan. A property does not usually cease to be residential just because it has serious disrepair. The courts have moved away from a broad or generous approach to “unsuitable for use”. The condition normally has to be materially worse than a tired, defective or heavily dated house. The defects must be such that the property was not truly capable of being used as a dwelling at the relevant date.

On the anonymised facts here, evidence of damp, roof works, electrical upgrading and repairs may support further investigation, but those features alone do not guarantee a reclaim. Much would depend on what the survey and supporting records actually show about the severity of the defects at completion.

If, for example, the evidence only shows damp treatment, roof repairs and general modernisation, HMRC may well argue that the buildings remained residential. If the evidence shows something more fundamental, such as the absence of essential facilities, severe water ingress rendering rooms unusable, or defects making occupation genuinely impossible, the position may be stronger.

Outcome

The practical conclusion is that a reclaim may be worth assessing where there is good evidence of serious defects at the purchase date, but success depends on meeting a demanding legal test.

A property is not treated as non-residential simply because it needed damp treatment, roof works or electrical repairs. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for proving that a dwelling was not suitable for use is now relatively high.

So, a buyer in this position should not assume that survey defects and renovation invoices automatically create a valid SDLT refund claim. They may support a claim, but only if they show that the property was genuinely unsuitable for use as a dwelling at completion.

Practical Steps

If you want to assess whether you may have overpaid SDLT in this kind of case, gather the evidence in a structured way:

• obtain the signed TR1, SDLT5, sale contract and completion statement;
• collect the survey report and any valuation or condition report prepared before exchange or completion;
• keep photographs showing the property’s condition at or very close to completion;
• assemble invoices, quotations and building contracts for remedial works;
• identify whether any essential facilities were missing, unsafe or unusable at completion;
• focus on the condition at the effective date of the transaction, not just what happened later;
• compare the evidence against the current, stricter case law, especially Mudan.

It is also sensible to review exactly what the survey says. Phrases such as “requires repair”, “poor condition” or “further investigation recommended” do not necessarily show legal uninhabitability. The strongest cases usually involve evidence that the building could not reasonably function as a dwelling at all.

Conclusion

You may be able to challenge SDLT paid on a defective residential purchase, but only where the facts show more than ordinary disrepair or refurbishment needs. Damp, roof defects and repair invoices are relevant, but they are not enough by themselves. The decisive issue is whether the property was unsuitable for use as a dwelling at completion, and that is now a relatively high threshold after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Legal References Used

• Finance Act 2003
• Finance Act 2003, 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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