Can you claim an SDLT refund on an HMO with individual room tenancies?

Introduction

Many landlords ask whether a house in multiple occupation (HMO) can qualify for a Stamp Duty Land Tax (SDLT) refund because it is let room by room, licensed as an HMO, or used under planning class C4. This question often comes up where the property has several tenants on separate assured shorthold tenancies, but still operates as one shared house.

The key SDLT point is that classification is driven mainly by the physical nature of the property at the effective date of the transaction, usually completion. A property does not become multiple dwellings simply because it has multiple occupiers, multiple tenancy agreements, or an HMO licence.

The Question

A buyer purchased a six-bedroom licensed HMO as an investment property. The house was let on a room-by-room basis, with separate ASTs for individual occupiers. The occupiers shared a kitchen and bathrooms, and there were no en-suites, kitchenettes, or self-contained units within the building. The property was treated as standard residential property for SDLT on purchase.

The buyer wanted to know whether the HMO status, separate tenancies, or C4 planning use could support a refund claim, including under Multiple Dwellings Relief (MDR). The buyer also asked whether a later arrangement to lease the property to a supported living provider would change the SDLT position or create a new relief route.

Nick’s Explanation

Nick’s view was that there was no viable SDLT refund route on these facts.

In summary, his reasoning was:

• MDR cannot now be claimed for this purchase because the statutory time limit for amending or reclaiming overpaid SDLT has passed.
• The property was a single dwelling in physical terms, because it had shared facilities and no self-contained units.
• Separate ASTs, HMO licensing, and C4 planning use do not by themselves turn one house into multiple dwellings for SDLT purposes.
• A later commercial letting arrangement, including a lease to a supported living provider, would not retrospectively alter the SDLT treatment fixed at completion.

As Nick put it in substance, SDLT is assessed by reference to the property’s physical characteristics rather than its licensing status or tenancy structure, and later changes in use do not rewrite the original SDLT position.

The Law

SDLT on land transactions is governed by Finance Act 2003.

For this issue, the main provisions are:

• Finance Act 2003, section 116, which deals with the meaning of “dwelling” and is central to deciding whether a property consists of one dwelling or more than one dwelling.
• Schedule 10 to Finance Act 2003, which contains the machinery for relief claims and amendments, including the time limits for reclaiming overpaid SDLT.

MDR was historically available in some cases where a transaction involved more than one dwelling. However, whether there is more than one dwelling depends on the property as it existed at the effective date of the transaction. The test is not satisfied merely because different occupiers have separate tenancy agreements over different rooms.

In practical SDLT analysis, the question is usually whether the building contains separate units that are sufficiently self-contained to count as distinct dwellings. Shared kitchens and shared bathrooms usually point strongly toward a single dwelling rather than multiple dwellings.

If a taxpayer argues that a property was not suitable for use as a dwelling at the effective date, the courts now apply a relatively demanding threshold. 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 now relatively high.

Analysis

Step one is to identify the relevant date. SDLT is determined at the effective date of the transaction, usually completion. That means the physical condition and layout of the property at that time are what matter.

Step two is to consider whether the building contained more than one dwelling. On the facts described, the property was a single house occupied by several unrelated individuals, each renting a room, but sharing the main living facilities. There were no self-contained flats or bedsits. There were no separate kitchens within the rooms. There were no private bathroom and cooking facilities arranged so that each unit could function independently as a dwelling.

That makes it very difficult to argue that the property comprised multiple dwellings for SDLT purposes. A room-only letting structure is not enough. Nor does an HMO licence change the SDLT analysis. HMO licensing regulates occupation and housing standards; it does not decide whether there are multiple dwellings under Finance Act 2003.

Step three is to consider planning status. C4 use class may be relevant for planning law, but it does not determine the number of dwellings for SDLT. A building can be in C4 use and still be a single dwelling for SDLT purposes.

Step four is to consider time limits. Even if MDR had once been arguable, a claim to recover overpaid SDLT would still need to be made within the statutory time limit. For a purchase completed in 2020, that time limit has expired. So the claim fails on timing as well as substance.

Step five is to consider whether a later lease to a supported living provider changes anything. It does not alter the historic SDLT position on the original acquisition. SDLT is charged by reference to the transaction that took place and the facts at that time. A later change in occupational arrangement, business model, or tenant profile does not retrospectively convert a single dwelling into multiple dwellings for the original purchase.

Finally, if someone were to explore whether the property was not suitable for use as a dwelling at completion, that is a separate argument from MDR. But where the property was already being used as an HMO or was capable of ordinary residential use, that argument is unlikely to succeed. In any event, after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the courts require a relatively serious level of disrepair or defect before a property will be treated as not suitable for use as a dwelling.

Outcome

On these facts, the practical conclusion is that an SDLT refund is unlikely to be available.

• The property appears to have been a single dwelling, not multiple dwellings.
• Separate room tenancies, HMO licensing, and C4 planning use do not change that result.
• Any MDR reclaim for a 2020 purchase is now out of time.
• A later supported living lease would not retrospectively alter the SDLT treatment of the original purchase.

Practical Steps

If you are reviewing a similar case, the sensible steps are:

1. Check the completion date of the purchase and calculate whether any SDLT amendment or reclaim is still within time.
2. Review the floor plans and layout as they existed at completion, not as altered later.
3. Ask whether the property contained genuinely self-contained units, each with the facilities needed for independent day-to-day living.
4. Do not assume that multiple ASTs, HMO licensing, or planning use class decide the SDLT outcome.
5. If considering a “not suitable for use” argument, compare the property’s condition against the now relatively high threshold confirmed in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.
6. Keep copies of the SDLT return, completion statement, plans, photographs, survey material, and any contemporaneous evidence showing the property’s physical state at the effective date.

Conclusion

An HMO is not automatically treated as multiple dwellings for SDLT. Where a property is one shared house with shared kitchen and bathroom facilities, it will usually remain a single dwelling even if each occupier has a separate tenancy and the house is HMO-licensed. For an older purchase, the reclaim time limit may also be fatal. A later supported living arrangement does not rewrite the SDLT position on the original acquisition.

Legal References Used

• Finance Act 2003, section 116
• Finance Act 2003, Schedule 10
• 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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