Tips & Advice
Uninhabitable Property Stamp Duty: What Mudan Means For Buyers
Published: 26 September 2025
Reading time: ~4 minutes
Why Mudan Matters For Uninhabitable Property Stamp Duty
A recent Court of Appeal decision in Amarjeet and Tajinder Mudan v HMRC helps us understand how “uninhabitable property stamp duty” is applied.
The couple bought a large detached house that had been lived in before but needed major works to make it "livable" again. They rewired, installed a new boiler, replaced the roof, repaired broken windows, gutted the kitchen, tanked the basement and cleared rubbish. They argued it was not “suitable for use as a dwelling” when purchased so lower, non-residential, Stamp Duty Land Tax (SDLT) rates should apply.
They failed in their arguments. HMRC won at the First-tier Tribunal and Upper Tribunal, and the Court of Appeal dismissed the taxpayers appeal.
What “Suitable For Use As A Dwelling” Means
Finance Act 2003, Section 116 states that “residential property” includes a building “used or suitable for use as a dwelling or is in the process of being constructed or adapted for use as a dwelling”.
HMRC’s view is that “dwelling” generally takes its ordinary meaning for SDLT, looking at the building’s inherent characteristics rather than how move-in ready it is. HMRC’s manual (SDLTM00385), sets out examples and warnings on “not suitable for use as a dwelling” claims.
The Court of Appeal agreed with that ordinary-language approach. A property of the sort people live in remains “residential” even if unmodernised or undergoing renovation. Needing repairs does not change its fundamental character. In Mudan, the property had all the features of a home and was structurally sound, so it was still considered "residential" when bought.
SDLT Refund Claim Process After Mudan
Refund claims are still possible in the right cases, but the Mudan decision makes the rules tighter.
Claims that a house became “non-residential” simply because it needed a new roof, boiler or rewiring are unlikely to succeed. Valid scenarios may include:
- Mixed-use purchases – e.g., a flat above a shop where there’s genuine commercial space.
- Non-residential property – land or buildings that people don’t live in.
- Truly uninhabitable on the day you bought it – the condition is so poor that it couldn’t be used or suitable for use as a dwelling.
Helpful examples from past cases:
- P N Bewley Ltd v HMRC [2019] TC6951: The company acquired a substantially dilapidated bungalow which had no radiators, pipework or floorboards, and serious asbestos. Renovation or refurbishment was so unviable that the bungalow was demolished and replaced with a new dwelling. The property was considered not suitable for use as a dwelling on the day of completion; therefore, lower non-residential SDLT rates applied.
- Fish Homes Ltd v HMRC [2020] TC7666: The company purchased a flat in Greenwich that was covered in potentially flammable cladding. The property could not be rented out under a formal tenancy agreement because of the cladding but it was informally let to a shareholder's daughter. The tribunal decided that changes in building regulations or failure to comply with building regulations did not necessarily change the characteristics of the building and did not make it incapable or unsuitable for use as a dwelling. The flat was considered a dwelling for the purposes of SDLT and the higher residential rate was charged.
As you can see from the cases above, it is important to take extra care if you are considering an SDLT refund claim. HMRC has warned homebuyers about misleading agents and “no win, no fee” schemes following the Court of Appeal’s decision. See HMRC’s press release: 'Homebuyers warning on bogus Stamp Duty claims'.
Speak to us (a qualified adviser) before you submit any claim or amendment.
Practical Checks Before You Buy Or Claim
Use this simple checklist if a property needs work:
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Identify the building’s core features. Does it have bedrooms, a kitchen and bathrooms, and is it the sort of house or flat that people live in?
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Assess safety and structure. Serious structural failure, contamination, or a legal prohibition may point away from “suitable for use as a dwelling”. Cosmetic or service-level issues usually do not.
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Gather evidence. Surveyor reports, planning records, photos at completion and utility status all help.
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Be wary of forms or templates labelled “derelict property assessment form”. There is no official HMRC form of that name for SDLT. Evidence must reflect the legal tests, not marketing language.
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Consider mixed-use. If there is genuine commercial use on the same title, SDLT may be calculated under the lower non-residential rates.
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Seek advice.
Here are two client cases showing how joined-up tax planning on property transactions can save costs when rules are applied correctly, not creatively:
Case Recap: Mudan v HMRC
Facts: A previously occupied house in a residential street. Empty at purchase, but structurally sound. Significant renovation followed to make it comfortable.
Outcome: The First-tier Tribunal, the Upper Tribunal, and the Court of Appeal agreed it was still “residential property” for SDLT at completion because an ordinary speaker would describe it as a home-type building.
Why it matters: The ruling tightens arguments around “uninhabitable” status. It aligns practice with the statutory test and HMRC guidance, reducing the scope for aggressive “stamp duty refund uninhabitable property” claims based only on renovation needs. For background on the Upper Tribunal stage, see the official summary of the case here: Mudan v HMRC.
FAQs on Uninhabitable Property Stamp Duty
Can I claim a Stamp Duty refund if the property needed a new roof and boiler?
Usually not. In Mudan, major works like a roof, boiler and rewiring did not stop the house being “suitable for use as a dwelling”. Claims based only on renovation or modernisation are unlikely to meet SDLT refund eligibility criteria.
What is the residential property classification for SDLT?
The law looks at whether the building is used or suitable for use as a dwelling, plus its garden or grounds. See FA 2003, Section 116, and HMRC’s manual SDLTM29851 for the ordinary-meaning approach to “dwelling” for SDLT.
How does the SDLT refund claim process work?
You can amend an SDLT return or submit a repayment claim within statutory time limits. You must show why the original calculation was wrong. Given HMRC’s warnings about unsubstantiated claims, it is wise to get advice before filing.
What if I take HMRC to a tribunal over SDLT?
An HMRC tribunal appeal on SDLT turns on the facts and the legal tests. Mudan shows courts will focus on the property’s inherent character rather than how move-in ready it was. Independent evidence from qualified professionals is important.
How SCCS Accountants Can Help
Need a second opinion on a tricky purchase or a possible refund claim? Get expert, friendly help from SCCS Accountants. We support clients UK-wide, remotely and fast. Contact us today.
Disclaimer
This article is provided for general informational purposes only and does not constitute tax, legal, accounting, or financial advice. The information is based on UK law and HMRC guidance as at the date of publication, but rules and interpretations may change. We do not accept any liability for actions taken, or not taken, based on this content. Always seek tailored advice from SCCS Accountants before making financial or business decisions.