SDLT refunds on run‑down ‘uninhabitable’ properties after Mudan
NO VAT
Can you get an SDLT refund if a property bought in 2024 was uninhabitable?
Introduction
Many buyers ask whether they can reclaim Stamp Duty Land Tax (SDLT) if the property they bought was in very poor condition and could not be lived in at the time of purchase. This usually comes up where a dwelling has no working services, serious disrepair, or is undergoing major renovation.
The key issue is whether the property was “suitable for use as a dwelling” on the effective date of the transaction. That test matters because, if a building is not suitable for use as a dwelling, it may fall outside the normal residential SDLT rules. In some cases that can affect the rate paid and may create scope for a refund claim. But the legal threshold is now demanding, and a run-down property is not automatically treated as non-residential.
The Question
A buyer purchased a run-down property in December 2024 and wants to know whether there may be an SDLT refund. At the time of purchase, the property had no water or gas, and the electrical supply had only recently become usable during renovation works. The buyer considers the property uninhabitable and asks whether that condition could support a refund claim.
Nick’s Explanation
Nick’s core point was that, for purchases after 2 October 2024, the test has become much stricter. In anonymised form, his explanation was:
“As of 2 October last year, the property must have fundamental defects which cannot be repaired for HMRC to accept that it was not suitable for use as a dwelling.”
That is the crucial point. A lack of water, gas, or working electrics may show serious disrepair, but that does not necessarily mean the dwelling fails the SDLT test. If the defects can be remedied through repair, replacement or renovation, HMRC is now much less likely to accept that the property was not suitable for use as a dwelling.
Nick also noted that there had been appellate litigation on the meaning of suitability for use as a dwelling. That issue is now significantly shaped by Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, which confirms that the condition thresholds in these cases are relatively high.
The Law
SDLT is charged under the Finance Act 2003. Whether a transaction is taxed as residential or non-residential depends in part on whether the subject matter includes a building that is used or suitable for use as a dwelling.
The relevant statutory framework includes:
- Finance Act 2003, section 55
- Finance Act 2003, section 116
- Finance Act 2003, Schedule 4ZA, where higher rates are in issue
Historically, buyers sometimes argued that a very dilapidated house was not “suitable for use as a dwelling”, so the purchase should be treated as non-residential or mixed, often producing a lower SDLT charge. That argument became the subject of substantial litigation.
The legal position was tightened for transactions with an effective date on or after 2 October 2024. The legislation now directs attention to whether any unsuitability arises from works that could remedy the defect. In broad terms, if the building’s problems are capable of repair, replacement or renovation, that will usually count against a claim that it was not suitable for use as a dwelling.
In addition, the Court of Appeal in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 has reinforced that the bar is relatively high. In an uninhabitable or not suitable for use case, the condition must generally involve fundamental defects, and the modern approach is not satisfied merely because the property is run down, lacks services for a period, or needs extensive works before occupation.
Analysis
Applying those rules step by step:
The purchase took place in December 2024. That means the stricter post-2 October 2024 rules apply.
The property is described as run down, with no water or gas, and with electrical power only recently restored sufficiently to assist renovation works.
Those facts may show that the property was not practically ready to live in. But SDLT does not ask only whether immediate occupation was convenient or realistic. The legal question is whether the building was suitable for use as a dwelling in the statutory sense.
Following the current law, the condition usually needs to go beyond serious disrepair. The defects generally need to be fundamental, and the fact they can be repaired is highly important.
If the lack of water, gas and electrics arose from issues that can be fixed through ordinary renovation or reinstatement, HMRC is likely to say the property remained a dwelling for SDLT purposes, even if no one should sensibly have lived there at the time.
After Mudan, the threshold is now relatively high. A property does not usually cease to be suitable for use as a dwelling just because it is derelict, stripped out, unsafe for immediate occupation, or in need of substantial repair. There generally needs to be something more fundamental in nature.
So, on the facts given, there is no clear indication of the kind of irreparable or truly fundamental defect that would now usually be needed. Missing or disconnected services, without more, will often be treated as remediable defects rather than proof that the building was not suitable for use as a dwelling.
Outcome
On these facts, an SDLT refund claim is likely to be difficult.
For a purchase in December 2024, the present legal test is strict. A property in poor condition, even one with no working water or gas and only recently restored electricity, will not automatically qualify as non-residential or as unsuitable for use as a dwelling. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition thresholds are now relatively high in uninhabitable or not suitable for use cases.
Unless the property had fundamental defects of a kind that could not realistically be repaired, the buyer should proceed on the basis that a refund may not be available.
Practical Steps
If you are assessing a possible SDLT refund in a similar case, the sensible next steps are:
Check the effective date of the transaction. If it was on or after 2 October 2024, the stricter statutory position applies.
Gather evidence of the property’s condition at completion, including survey reports, photographs, contractor reports, utility records and any local authority material.
Identify the exact defects. Distinguish between disrepair that can be fixed and defects that are truly fundamental.
Consider whether the issues were remediable by repair, reinstatement or renovation. If they were, that is likely to weaken any refund argument.
Review the SDLT return that was filed and the basis on which the tax was originally calculated.
Take advice before making a reclaim. A weak claim can lead to delay and possible challenge by HMRC.
Conclusion
A property being uninhabitable in everyday language does not necessarily mean it was not suitable for use as a dwelling for SDLT. For purchases after 2 October 2024, and especially after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is relatively high. If the property’s problems were serious but repairable, a refund claim is unlikely to be straightforward and may well fail.
Legal References Used
- Finance Act 2003, section 55
- Finance Act 2003, section 116
- Finance Act 2003, Schedule 4ZA
- 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.
