Last updated: 14 October 2026
How does HMRC decide if a property is uninhabitable for SDLT?
HMRC looks at whether the property is suitable for use as a dwelling at the date of completion. Following tribunal cases such as Bewley, Mudan and Mobricorp, a building is only non-residential if it is genuinely incapable of being lived in, not just in need of modernisation or repair. Features such as an old kitchen, poor decoration, damp or a missing boiler usually aren’t enough. Serious structural defects, dangerous conditions or a building that would need major works before anyone could legally live there may qualify. If it isn’t a dwelling, non-residential rates apply and the higher rates for additional dwellings don’t.
Why it matters
| Purchase price £400,000 | Residential rates (additional property) | Non-residential rates |
| SDLT | £30,000 | £9,500 |
Non-residential rates for 2026/27 are 0% up to £150,000, 2% to £250,000 and 5% above. Residential rates are 0% up to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5 million and 12% above, plus a 5% surcharge on additional dwellings.
What tribunals have said
- Bewley (2019): a bungalow with asbestos, no heating and needing demolition was not suitable for use as a dwelling
- Later cases, including Mudan and Mobricorp: properties with damp, dated services or significant disrepair were still dwellings because they could be made habitable through repair
The test is objective: could the property be used as a home at completion, perhaps after routine works?
Factors HMRC considers
- Structural soundness and safety
- Whether water, drainage and electricity work or can be reconnected
- Kitchen and bathroom facilities
- Whether lenders would lend on it as residential
- Whether planning or building regulation consent is needed before occupation
Example
Oliver buys a derelict farmhouse for £400,000. The roof has collapsed, floors are unsafe and there are no services. An engineer’s report confirms it can’t be occupied. He pays non-residential SDLT of £9,500. His sister buys a tired Victorian house needing a new kitchen and rewiring; she must pay residential rates.
Reclaiming overpaid SDLT
You can amend an SDLT return within 12 months of the filing date. HMRC has warned against “uninhabitable” refund claims by no-win no-fee firms, and penalties apply for careless claims.
Common mistakes
- Treating a property needing modernisation as uninhabitable
- Relying on a firm promising a refund
- Not getting a surveyor’s report at completion
- Forgetting mixed-use rules when part is commercial
Records to keep
Keep the survey, photographs and engineer’s report from before completion. Evidence after works start is much weaker.
Mixed-use purchases
If a property includes a genuinely commercial element, such as a shop with a flat above or farmland used in a business, the whole purchase is taxed at non-residential rates. A garden or paddock used with the house is part of the dwelling, so claims based on large gardens rarely succeed.
Frequently asked questions
Does a missing kitchen make it uninhabitable?
Usually not.
Can I apply for a pre-transaction ruling?
HMRC rarely gives non-statutory clearances on SDLT facts.
Does this apply in Wales or Scotland?
They have their own taxes with similar tests.
Is a building plot residential?
Land with no dwelling is usually non-residential.
Related: the 3% SDLT surcharge, buying property in your own name or a company and buying a flat in instalments.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with SDLT on property purchases. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
