SDLT and Uninhabitable Properties: What the Mudan Decision Means for Property Buyers

Following the Court of Appeal decision in Mudan [2025] EWCA Civ 799, the position on Stamp Duty Land Tax(SDLT) and properties said to be unsuitable for use as a dwelling is now clearer, and more restrictive.

For buyers and advisers considering an SDLT reclaim or classification argument, the landscape has shifted.

The Key Clarification

The Court confirmed that the test is not whether a property is ready for immediate occupation at completion. Instead, the correct question is whether the building retains the fundamental characteristics of a dwelling.

This is a multi-factorial assessment. Structural integrity, historical use and overall character are highly relevant. A temporary state of disrepair at the effective date of transaction is not decisive. In practical terms, a property does not cease to be a dwelling simply because it requires renovation.

What the Courts and HMRC Are Saying

The decision aligns closely with the long-standing position of HM Revenue & Customs (HMRC).

Issues such as:

• Damp
• Unsafe electrics
• Roof repairs
• Flood damage
• Missing boilers or kitchens
• Structural defects capable of remedy

…will not automatically render a property unsuitable for use as a dwelling.

There is a clear distinction between:

• A dwelling requiring works; and
• A building that genuinely lacks the fundamental characteristics of a home.

That threshold is now firmly established as a high one.

What This Means for SDLT Reclaims

In the post-Mudan environment, speculative or lightly evidenced claims are unlikely to succeed. However, that does not mean every case fails.

Where a property truly lacks the essential characteristics of a dwelling, for example, where residential character has been lost or structural condition goes beyond repairable disrepair, a properly evidenced and technically robust position remains entirely viable. The key difference is evidence and analysis.

Our Approach

At Bonham & Brook, our advice is grounded in independent expert evidence and objective technical review.

We place particular reliance on:

• Contemporaneous structural reports
• Formal surveyor assessments
• Supporting third-party documentation prepared by qualified professionals
• Clear legal analysis of the relevant SDLT framework

In a recent case involving Life Dental Services Limited, we undertook a detailed technical review of the property condition and provided fully defensible advice on the SDLT position. This enabled the client to proceed with clarity and confidence while mitigating compliance risk.

In the current climate, where HMRC scrutiny is high and poorly supported claims are routinely rejected, a careful, technically defensible approach is essential for a robust claim.

Considering an SDLT Reclaim? Next Steps:

Early review can prevent costly disputes and ensure that any claim advanced is robust, proportionate and aligned with current judicial guidance.

If you’ve purchased property in the last 4 years and would like to review your transaction, we’re here to help! Our team at Bonham & Brook has over 20 years of combined experience in property tax and can guide you through every step.

Give us a call on 020 3523 9125 or email hmalik@bonhamandbrook.co.uk to get started.