Can you still make an uninhabitable property stamp duty claim after the Mudan case, including in Scotland?

Introduction

Many buyers have asked whether a property that was unsafe, derelict or in very poor condition at the time of purchase can still be treated as non-residential for stamp duty purposes. That question has become much more difficult after the decision in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

People also want to know whether claims can still be pursued in Scotland. The short answer is that the legal landscape is now much less favourable, and any argument based on a property being uninhabitable faces a high threshold. In practice, cases based only on serious disrepair or the need for renovation are now much harder to maintain.

The Question

A buyer asked whether support was still available for an uninhabitable property claim, including for a purchase in Scotland, after a recent legal update explaining that many such claims were being withdrawn or no longer supported.

The underlying concern was whether a buyer could still argue that a dwelling in very poor condition should be taxed as non-residential because it was not suitable for use as a home at the effective date of the transaction.

Nick’s Explanation

Nick explained that, following the Mudan litigation, the position had changed significantly. In anonymised form, his explanation was that tax authorities had become much more resistant to uninhabitable property claims and that many existing claims had been frozen, placed under enquiry, or withdrawn.

His central point was that the courts now focus on the property’s basic nature and permanent characteristics rather than simply asking whether someone could move in immediately on completion. In substance, his explanation was:

“A property that is fundamentally a dwelling will usually still be treated as residential, even if it needs substantial repairs or renovation. The stronger cases are now limited to buildings that are beyond repair and effectively require demolition or complete reconstruction.”

He also indicated that support for new claims was no longer generally being offered in the same way, although a self-claim style service might still be considered in future, including potentially for Scotland. That does not alter the underlying legal problem: the merits of the claim are now much weaker unless the facts are exceptional.

The Law

For transactions in England and Northern Ireland, stamp duty land tax is governed by the Finance Act 2003. Whether property is “residential property” matters because residential and non-residential rates differ.

The key concept in these cases is whether the building was “suitable for use as a dwelling” at the effective date of the transaction. If it was, it will usually be treated as residential property even if it was empty, neglected or in poor repair.

The modern approach has been shaped by appellate authority, including Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. The courts have taken a stricter view of attempts to reclassify run-down homes as non-residential. The question is not simply whether the property was comfortable, mortgageable, or capable of immediate occupation. The question is whether, viewed realistically, it still retained the character of a dwelling.

Where a property is so damaged that it has lost the essential characteristics of a dwelling, or can only sensibly be dealt with by demolition and rebuild, a taxpayer may still have an argument. But the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

For Scotland, the tax is generally Land and Buildings Transaction Tax rather than SDLT. The statutory framework is different, but anyone trying to run an “uninhabitable dwelling” style argument in Scotland still needs to be cautious. Similar issues of statutory wording, case law, and Revenue Scotland practice will arise, and a buyer should not assume that an argument succeeds merely because the property needed major works.

Analysis

Step one is to identify the relevant tax regime. If the purchase was in England or Northern Ireland, the issue is SDLT under the Finance Act 2003. If it was in Scotland, the issue is usually LBTT under Scottish legislation.

Step two is to look closely at the condition of the property on the effective date of the transaction. Evidence matters. Photographs, survey reports, structural reports, contractor evidence, insurance material, and any demolition advice may all be relevant.

Step three is to distinguish between serious disrepair and true loss of dwelling character. A property may be in a dangerous or unpleasant state and still remain a dwelling for tax purposes. Missing kitchens, defective bathrooms, damp, unsafe electrics, infestation, broken heating, water damage, or a need for extensive renovation will not automatically make it non-residential.

Step four is to ask whether the building had to be repaired or instead had to be fundamentally reconstructed. This is where the authorities now place considerable weight. If the property could still be restored as a dwelling through repair works, even expensive ones, the taxpayer’s case is likely to be weak. If the structure was beyond repair and demolition was the only realistic course, the argument is stronger.

Step five is to consider procedure. Where a return has already been filed, amendment windows, claim routes, enquiry powers and closure steps all matter. A buyer may in some circumstances be able to amend or resubmit, but that depends on the status of the return and whether the tax authority has opened an enquiry or issued a final decision.

Step six is to avoid assuming that earlier industry practice still applies. Before the later appellate decisions, some taxpayers and advisers took a broader view of what counted as unsuitable for use as a dwelling. That approach is now much harder to sustain.

Outcome

The practical conclusion is that uninhabitable property claims are now much harder to win. A property does not usually become non-residential just because it was unsafe, unmortgageable, vacant, stripped out, or in need of major renovation.

Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the condition threshold is relatively high. The better arguments are likely to be limited to cases where the building had effectively ceased to function as a dwelling and required demolition or complete reconstruction.

As for Scotland, support may or may not be available from a particular adviser, but that is separate from the legal merits. A buyer should assume that any similar claim in Scotland will also need careful analysis under the correct Scottish tax rules and should not be treated as straightforward.

Practical Steps

If you are assessing this issue, the sensible next steps are:

• Confirm whether your transaction falls under SDLT or LBTT.
• Gather contemporaneous evidence of the property’s condition at completion.
• Obtain any surveyor or structural engineer evidence showing whether the building required repair or demolition.
• Check whether the property still had the essential characteristics of a dwelling at the effective date.
• Review whether any amendment or claim deadline is still open.
• Check whether the return is under enquiry or whether a final decision has already been made.
• Be realistic about the effect of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799; claims based only on poor condition are now much weaker.
• If the property is in Scotland, take advice specifically on LBTT rather than assuming SDLT authorities apply directly.

Conclusion

It is no longer safe to assume that a badly damaged or unliveable home will qualify as non-residential for stamp duty purposes. The courts now look mainly at the property’s fundamental character, not simply whether it was fit for immediate occupation. After Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, only the most extreme cases are likely to succeed, especially where demolition or total reconstruction is genuinely required.

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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