Can you get a stamp duty refund if a property was uninhabitable when you bought it?

Introduction

Buyers sometimes ask whether they overpaid Stamp Duty Land Tax (SDLT) because the property they bought was in such poor condition that it should not have been treated as a dwelling. This usually comes up where the building had serious defects, no working services, or needed major renovation before anyone could live there.

The issue matters because, if a building was not “suitable for use as a dwelling” on the effective date of the transaction, the purchase may have fallen to be taxed at non-residential rates instead of residential rates. In some cases that can mean an SDLT refund. But the legal threshold is now relatively high, especially after the Court of Appeal’s decision in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

The Question

A buyer purchased an investment property in 2022 for £250,000 and paid SDLT on the basis that it was a residential purchase. At the time of purchase, the property had not been lived in for some time. The reported problems included:

• no central heating or radiators;
• no water supply to the property, with re-piping later required;
• a severely neglected garden; and
• electrical wiring and fittings said to be unsafe and unusable, requiring a full rewire.

The buyer then carried out a full renovation and sold the property about a year later. The question is whether those facts are likely to support an SDLT refund claim on the basis that the property was uninhabitable when bought.

Nick’s Explanation

Nick’s core point was that the test is not simply whether a property was run-down or in need of extensive works. The real question is whether it had lost its identity as a dwelling, so that it was no longer suitable for use as one at the purchase date.

In anonymised form, his explanation was that if a property has lost its “identity” as a dwelling, it may not be treated as suitable for use as a dwelling, in which case non-residential SDLT rates may have applied. He also noted that the answer depends heavily on the true condition of the property at the time of purchase, and that proper evidence is important, such as a survey, photographs, and other contemporaneous material.

That approach is consistent with the way tribunals and courts have analysed these cases. The condition of the property on the effective date is central. Later renovation works, and even the fact that a property was later restored and sold, do not by themselves prove that it was unsuitable for use as a dwelling when acquired.

The Law

SDLT is charged under the Finance Act 2003. Whether residential or non-residential rates apply depends on the nature of the property at the effective date of the transaction.

For SDLT purposes, a building is generally 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 key issue in many refund claims is the meaning of “suitable for use as a dwelling”.

Case law has established that this is an objective test. The tribunal or court looks at the physical condition of the property at the relevant date. The question is not whether the buyer intended to renovate it, nor whether it was attractive to live in, nor whether mortgage lenders would have been happy to lend on it. The question is whether, viewed realistically, it remained suitable for use as a dwelling.

The courts have also rejected the idea that every serious defect makes a property non-residential. A building can still be a dwelling even if it is in poor repair, lacks modern facilities, or needs substantial work.

In an uninhabitable or not suitable for use case, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That decision makes clear that disrepair, missing fixtures, and renovation needs will not automatically mean that a property has ceased to be a dwelling. The building must, in substance, have crossed a fairly demanding line before it will be treated as not suitable for use as a dwelling.

Analysis

Applying those principles step by step, the buyer’s case would need to be tested carefully against the condition of the property at completion.

First, the absence of central heating or radiators does not, on its own, usually make a property unsuitable for use as a dwelling. Many older properties may have inadequate or outdated heating but still retain their residential character.

Second, the lack of a water supply is more significant. A dwelling without running water may point toward unsuitability for residential use, particularly if the issue was not a temporary interruption but a genuine inability to use the property for ordinary domestic living. However, the detail matters. It would be important to know whether the property was physically disconnected, whether there was any functioning kitchen or bathroom provision, and whether the problem was capable of straightforward reconnection or required major replacement works.

Third, a neglected garden, even one left untouched for many years, is unlikely to carry much weight in itself. External overgrowth may show neglect, but it does not usually determine whether the building remained a dwelling.

Fourth, unsafe electrics requiring a full rewire may be relevant, but again not decisive on their own. Many properties are bought with obsolete or dangerous wiring and are still treated as dwellings for SDLT purposes. The stronger the evidence that the electrics made occupation genuinely impossible at the purchase date, the stronger the argument becomes.

Fifth, the fact that the property had been empty for a long period is relevant background but not conclusive. A vacant house can still be a dwelling. The legal test focuses on suitability for use, not actual occupation.

Sixth, the fact that the buyer carried out a complete renovation and then sold the property a year later does not itself prove that the building had lost its identity as a dwelling. Many residential properties are bought for refurbishment and resale while still remaining residential property at purchase.

On the facts given, there are some features that could support an argument, especially the lack of water and the alleged unsafe electrical system. But the overall picture also looks like a typical severe renovation case rather than an obviously non-dwelling case. After Mudan, that distinction is important. The courts now set a relatively high bar. A property generally needs to be in a condition going beyond ordinary dilapidation or even major refurbishment need before it will be treated as not suitable for use as a dwelling.

In practice, the strength of any claim would depend on the evidence. Useful material would include:

• a RICS survey or valuation prepared at or near the purchase date;
• photographs and videos showing the condition on completion;
• electrical reports, water authority documents, and contractor reports;
• evidence showing whether bathroom and kitchen facilities were usable;
• completion statements and auction particulars, if relevant; and
• any contemporaneous description of the property as incapable of occupation.

The more the evidence shows that ordinary residential occupation was not realistically possible at the purchase date, the better the argument. If the evidence shows only that the property was very dated, neglected, and in need of major works, the claim is much weaker.

Outcome

On these facts alone, a refund is possible in theory but far from certain. The condition described does not automatically mean the property was not suitable for use as a dwelling. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold for establishing that a property was uninhabitable or not suitable for use as a dwelling is relatively high.

A successful claim would likely require strong contemporaneous evidence showing that, at the date of purchase, the property had genuinely lost its identity as a dwelling and could not realistically be used as one.

Practical Steps

If you are assessing a similar case, the sensible next steps are:

1. identify the exact condition of the property on the effective date of the transaction;
2. gather contemporaneous evidence, especially surveys, reports, invoices, and dated photographs;
3. separate serious defects from mere disrepair or renovation needs;
4. consider whether basic living functions were actually available, including water, sanitation, electricity, and safe occupation;
5. review the SDLT return originally filed and the basis on which residential rates were applied; and
6. compare the facts carefully with the current case law, especially the Court of Appeal guidance in Mudan.

Because these claims are highly fact-sensitive, the answer usually turns less on labels such as “uninhabitable” and more on the actual physical state of the building at the relevant date.

Conclusion

A property in poor condition does not automatically qualify for an SDLT refund. The legal question is whether it was still suitable for use as a dwelling when bought. Missing heating, no water, unsafe electrics, and major renovation needs may help, but after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the threshold is relatively high. A claim will usually stand or fall on the quality of the evidence about the property’s condition at completion.

Legal References Used

• Finance Act 2003
• 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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