Can you claim lower SDLT if a property is uninhabitable, and what if you already claimed Multiple Dwellings Relief?

Introduction

Buyers often ask whether a badly damaged or derelict property can be treated as non-residential or mixed-use for Stamp Duty Land Tax purposes. That question matters because the SDLT result can be very different depending on whether the property is still legally treated as a dwelling at the effective date of the transaction.

A related problem arises where the buyer has already claimed Multiple Dwellings Relief on a purchase of more than one property. If that relief was claimed on the basis that all the units were dwellings, it can be difficult to argue later that one of them was not suitable for use as a dwelling after all.

This issue has become even more important because the courts have recently taken a stricter view of when a property is truly unsuitable for use as a dwelling. In uninhabitable or not suitable for use cases, 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 purchased several residential units in one transaction. Two were said to be in very poor condition, with one having been empty for many years, and another needed a full back-to-brick renovation. SDLT was paid using Multiple Dwellings Relief.

The buyer then asked whether any SDLT could be reclaimed on the basis that one of the properties was uninhabitable. The buyer also asked more generally how current uninhabitable property cases were progressing, and later raised a separate possible purchase of a heavily damaged bungalow with collapsed ceilings, broken windows, missing pipework and stripped-out electrics.

The core question is this: if a property is in very bad condition, can the buyer pay less SDLT by treating it as not suitable for use as a dwelling, and does that argument still work if Multiple Dwellings Relief has already been claimed?

Nick’s Explanation

Nick’s view was that the buyer had probably already reduced the SDLT liability as far as possible by claiming Multiple Dwellings Relief at completion.

His key point was that claiming Multiple Dwellings Relief involves asserting that the purchased units are dwellings. If the buyer then argues that one of those properties was uninhabitable and therefore not residential for SDLT purposes, that tends to undermine the original self-assessment.

In anonymised form, his reasoning was:

“You’ve claimed Multiple Dwellings Relief, which means you’re stating that all the properties you bought are considered dwellings. But if you claim one of the properties is uninhabitable, you’re essentially undoing that self-assessment.”

He also noted that, on the figures he reviewed, the SDLT already paid under Multiple Dwellings Relief was lower than the SDLT that would have arisen on an ordinary linked residential purchase with the higher rates. He further observed that even if one property were treated as unsuitable for use as a dwelling so that the transaction became mixed-use, the alternative SDLT result would not necessarily be better.

Nick also explained that HMRC had become much stricter about these claims and that, because of the change in case law, uninhabitable property claims were effectively being put on hold while the position developed. That caution is even more justified now given the Court of Appeal’s decision in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Law

SDLT is charged under the Finance Act 2003. Whether residential rates apply depends in part on whether the subject matter of the transaction includes a “dwelling” or land that forms part of the garden or grounds of a dwelling.

The key statutory provisions include:

• Finance Act 2003, section 43
• Finance Act 2003, section 55
• Finance Act 2003, section 58D
• Finance Act 2003, Schedule 4ZA
• Finance Act 2003, Schedule 6B

For many years, buyers argued that a property in serious disrepair was not suitable for use as a dwelling at the effective date of the transaction, so it should not be taxed as residential property. In some cases that argument was used to say that a purchase was mixed-use rather than wholly residential.

The courts have now taken a narrower approach. The modern question is not simply whether the property was pleasant, mortgageable or ready for immediate occupation. The issue is whether, viewed realistically at the effective date, it was suitable for use as a dwelling.

In uninhabitable or not suitable for use cases, the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Severe disrepair, vandalism, missing fittings and the need for extensive renovation do not automatically mean that a building stops being a dwelling for SDLT purposes.

Where Multiple Dwellings Relief is in issue, the relief historically applied where a transaction involved an interest in at least two dwellings. Although the relief has now been abolished for many transactions going forward, it remains relevant for earlier transactions and for historical advice. A buyer who claimed that relief will usually have filed the SDLT return on the basis that the relevant properties were dwellings.

Analysis

The starting point is to identify what was claimed on the SDLT return at completion.

If the buyer claimed Multiple Dwellings Relief, that usually means the return treated the purchased units as dwellings. That matters because a later reclaim based on one unit not being suitable for use as a dwelling may conflict with the original filing position.

Step by step, the analysis works like this:

1. Ask what the buyer said on the original SDLT return. If Multiple Dwellings Relief was claimed, the filing position was that there were multiple dwellings in the transaction.

2. Consider whether the buyer now wants to say that one property was so derelict that it was not suitable for use as a dwelling at the effective date.

3. Recognise the tension between those two positions. It may not be impossible in every case, but it is inherently difficult to maintain both arguments together.

4. Apply the current legal test strictly. After Mudan, the threshold for proving that a building was not suitable for use as a dwelling is high. A property can be in dreadful condition and still be a dwelling for SDLT purposes.

5. Compare the tax outcomes. Even if the uninhabitable argument were available, it may not produce a lower SDLT figure than the relief already claimed.

6. Take HMRC practice into account. HMRC closely scrutinises amended returns and repayment claims in this area, especially where the buyer is trying to revisit the characterisation after completion.

In the scenario described, the buyer had already used Multiple Dwellings Relief and had achieved a lower SDLT amount than would have applied on a standard higher-rates residential calculation. On the figures discussed, even a hypothetical mixed-use treatment would not have produced a materially better result.

That means there were really two separate obstacles:

• the legal obstacle, because arguing “not a dwelling” cuts against the earlier Multiple Dwellings Relief position; and
• the practical obstacle, because the alternative SDLT result was not actually better.

For the later proposed bungalow purchase, the correct question would be asked at completion, not only afterwards. If a buyer is considering self-assessing as non-residential or mixed-use from the outset, the evidence must be very strong. But the current case law means that even extensive damage such as collapsed ceilings, broken glazing, stripped services and major vandalism may still not be enough unless the facts clearly cross the now demanding threshold.

Outcome

In a case where Multiple Dwellings Relief has already been claimed, it is usually not sensible to pursue a later SDLT reclaim based on one of the properties being uninhabitable.

That is especially so where:

• the original SDLT return treated all units as dwellings;
• the alternative argument would contradict that treatment;
• the tax saving from the alternative treatment is marginal or non-existent; and
• the current legal threshold for proving unsuitability for use as a dwelling is high after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

In short, a poor survey report, renovation invoices and photographs may support the factual picture, but they do not by themselves guarantee that the property was not a dwelling for SDLT purposes.

Practical Steps

If you are assessing a similar SDLT issue, the sensible steps are:

1. Review the SDLT return filed at completion and identify exactly what was claimed.

2. Check whether Multiple Dwellings Relief was used, because that may limit the scope for a later inconsistent argument.

3. Compare the actual SDLT paid with the SDLT that would have been due under any proposed alternative treatment. Do not assume a reclaim will produce a saving.

4. Gather all contemporaneous evidence from the completion date, including the survey, legal pack, photographs, builder reports and any evidence showing the state of utilities, sanitation, access and structural integrity.

5. Apply the current case law, not older marketing material or outdated commentary. The threshold for “unsuitable for use as a dwelling” is now relatively high.

6. If you are approaching the amendment or repayment deadline, get the timing reviewed carefully. SDLT time limits can be critical.

7. For future purchases, consider the SDLT position before completion rather than assuming it can be corrected later.

Conclusion

A buyer who has already claimed Multiple Dwellings Relief will usually struggle to argue later that one of the purchased properties was not a dwelling because it was uninhabitable. Even apart from that inconsistency, the courts now set a demanding threshold for showing that a property was unsuitable for use as a dwelling. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, these claims need particularly careful analysis before any SDLT return is amended or any reclaim is made.

Legal References Used

• Finance Act 2003, section 43
• Finance Act 2003, section 55
• Finance Act 2003, section 58D
• Finance Act 2003, Schedule 4ZA
• Finance Act 2003, Schedule 6B
• 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.