Can you reclaim SDLT if a property had no kitchen or utilities and was said to be uninhabitable?

Introduction

Buyers sometimes assume that if a dwelling has no working kitchen, no utilities, or cannot be mortgaged, it must fall outside the normal Stamp Duty Land Tax (SDLT) rules for residential property. That can lead to the belief that SDLT has been overpaid and that a refund should be claimed.

The legal position is more demanding than many people expect. The question is not simply whether the property was inconvenient, in poor condition, or unsuitable for mainstream mortgage lending. The key issue is whether, at the effective date of the transaction, the building was suitable for use as a dwelling for SDLT purposes. Recent case law has made clear that the threshold for showing a property was not suitable for use is now relatively high.

The Question

A buyer purchased a detached bungalow from a probate estate. The property was bought using bridging finance because it was not mortgageable on ordinary terms. At the time of purchase, it reportedly had no working kitchen and no connected utilities. SDLT has already been paid, and the issue is whether the buyer may be entitled to amend the return and reclaim SDLT on the basis that the property was uninhabitable or not suitable for use as a dwelling.

Nick’s Explanation

Nick’s explanation, put into general terms, is that the absence of a working kitchen or utilities does not automatically mean a property stops being residential for SDLT. The test is stricter than many buyers assume.

In substance, his reasoning is that a refund claim would only have realistic prospects if the property’s condition, viewed at completion, was serious enough to show that it was not suitable for use as a dwelling. A property can still be a dwelling even if it is run down, requires major works, lacks modern facilities, or is difficult to finance.

That approach is consistent with the modern case law. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition threshold in “not suitable for use” cases is now relatively high.

The Law

SDLT is charged under the Finance Act 2003. Whether the residential or non-residential rules apply depends in part on whether the subject matter of the transaction includes a “dwelling”.

The key statutory provisions are in Schedule 4ZA to the Finance Act 2003, which uses the concept of a dwelling and whether a building is suitable for use as a single dwelling. The same concept is also important more broadly in SDLT classification questions.

In practical terms, the question is usually whether the property, at the effective date of the transaction, was suitable for use as a dwelling. That is a factual question judged objectively.

Case law has established a number of important points:

• A property does not cease to be residential merely because it is old, neglected, or in need of repair.
• The fact that a lender would not offer a normal residential mortgage is relevant background, but it is not the legal test.
• The absence of some facilities, including a kitchen or utility supply, may be relevant, but it is not decisive on its own.
• The condition must be sufficiently serious to show that the building was not suitable for use as a dwelling at the relevant date.

The latest and most important authority on the high threshold point is Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

The issue should be approached step by step.

First, identify the relevant date. For SDLT, the property’s condition is considered at the effective date of the transaction, usually completion. Later renovation works do not determine the position, although they may help explain the original condition if supported by evidence.

Second, consider what “not suitable for use as a dwelling” really means. It does not mean simply unattractive, inconvenient, or requiring refurbishment. Many properties are bought in poor condition but still count as dwellings for SDLT.

Third, look at the reported facts:

• the property was a bungalow
• it was sold through a probate estate
• it had no working kitchen
• it had no utilities connected or working
• it was not mortgageable through ordinary lending and bridging finance was used

Those facts may suggest serious disrepair, but they do not by themselves prove that the bungalow was not suitable for use as a dwelling. A kitchen can be replaced. Utilities can sometimes be reconnected quickly. A probate property may have been vacant for some time, but vacancy alone is not enough.

Fourth, ask whether the defects went beyond disrepair and crossed the legal threshold. Examples that may help support a “not suitable for use” argument can include severe structural failure, dangerous contamination, conditions making occupation unsafe, or such fundamental absence of basic living functionality that the building could not realistically be used as a home at completion. Even then, the courts now apply this category narrowly.

Fifth, weigh the impact of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The Court of Appeal confirmed that the threshold is relatively high. That makes refund claims based only on missing facilities or poor condition harder to sustain than some earlier buyers may have assumed.

Sixth, consider evidence. A buyer seeking to amend an SDLT return would need strong contemporaneous evidence, such as:

• a survey or structural report dated close to completion
• photographs showing the actual state of the property at completion
• evidence about the utility position and whether services were disconnected, unavailable, or unsafe
• builder or engineer reports identifying conditions preventing occupation
• completion statements, auction particulars, or legal pack material describing the state of the property

Without evidence of genuinely serious defects, HMRC is likely to regard the property as a dwelling despite the absence of a kitchen, the lack of utilities, or the use of bridging finance.

Outcome

On the facts described, a refund is not automatic and may be difficult to obtain. A detached bungalow with no working kitchen and no utilities may still be treated as residential property for SDLT if it remained suitable for use as a dwelling in the legal sense.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for showing that a property was not suitable for use as a dwelling is now relatively high. Unless there is strong evidence of more fundamental defects than those described, the buyer may not have a strong SDLT repayment claim.

Practical Steps

A buyer in this position should:

• obtain and review all survey, valuation, and contractor evidence from around the completion date
• gather photographs showing the exact state of the property at completion
• confirm whether utilities were merely disconnected or whether there was a more serious issue making occupation impossible or unsafe
• check whether the property had structural, environmental, or safety defects beyond the missing kitchen and services
• review the SDLT return already filed and the filing deadline for any amendment or repayment claim
• assess the facts against the current case law, especially the high threshold confirmed in Mudan

If the evidence shows only that the property was run down, lacked a functioning kitchen, and needed reconnection of services, that will often not be enough. If the evidence shows much more serious conditions preventing use as a home, the position may be different.

Conclusion

A property does not become non-residential for SDLT simply because it is unmortgageable, has no working kitchen, or has no utilities. The legal test is whether it was suitable for use as a dwelling at completion, and that is now a demanding threshold. In light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, a repayment claim will usually need strong evidence of genuinely serious defects, not just disrepair or refurbishment needs.

Legal References Used

• Finance Act 2003
• 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.

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