Stamp Duty Refunds for Uninhabitable Properties: Everything You Need To Know

New English Estate.

Whether you’ve just purchased a second home or have just added an exciting buy-to-let investment to a property portfolio, stamp duty land tax is one of the many costs you should keep an eye on. 

But did you know that you could be entitled to a sizable stamp refund for an uninhabitable property? 

Thanks to the introduction of new case law, those who had to foot an additional stamp duty surcharge on a second dwelling could apply for a rebate. 

In this guide, our team of specialist consultants, accountants, tax consultants, legal advisors, and chartered surveyors will give you everything you need to know. 

We’ll cover: 

  • What stamp duty is
  • When and where stamp duty costs apply
  • What makes a property unsuitable for habitation
  • Who could be entitled to stamp duty land tax refunds
  • What to expect from the rebate process
  • How we could help you make a claim

Here at Stamp Duty Claims, we’ve helped thousands of customers up and down the country successfully claim back money that’s been overpaid to HMRC. 

When you need financial peace of mind, especially when it comes to securing a potential stamp duty rebate, our unbeatable no-win, no-fee service comes straight from trusted experts. 

So if you think you might have paid excess stamp duty land tax on your residential property – but aren’t sure where to start – you’ve come to the right place.

Let’s dive in.

So, what is stamp duty?

If you live in England and Northern Ireland and are looking to make an additional property purchase, then you’ll likely have to pay Stamp Duty Land Tax (SDLT). 

Stamp Duty is a well-known tax that most people are expected to pay on residential property purchases or the sale of land. 

However, how much you’re expected to pay is determined by the price of the dwelling – with different thresholds leading to higher or lower surcharges. As a rule, the rates of stamp duty are based on where your purchase falls within HMRC’s ‘Stamp Duty Tax Bands’.

From here, you’ll be able to see how much you’ll need to pay in SDLT, as well as the usual rates buyers are expected to pay outright. 

It’s important to note that Stamp Duty Land Tax reliefs are available to those who meet certain criteria, such as those buying a house for the first time. 

What about stamp duty on a second home?

At Stamp Duty Claims, we assist clients who have purchased second homes or have property portfolios because they pay a higher rate of stamp duty. 

It’s important to remember that no matter what you plan to do with your additional property – whether that’s as a buy-to-let investment or as another residence – it will still be classed as a second home. 

For these second properties, SDLT does have a few exemptions. These are usually on ‘moveable’ dwellings such as motorhomes, houseboats or caravans – or on freehold properties that have been purchased for under £40,000.

Although there are many different circumstances that HMRC considers when it comes to cases of overpayment, our expert team are specialists when it comes to dwellings with multiple issues. 

In this case, you could have paid significantly more than what you should have for an ‘uninhabitable’ property. 

Now, you might be asking “what actually makes a property ‘uninhabitable’ – and how do I know if mine meets SDLT standards?” 

Don’t worry – we’ll touch on this next.

Do I pay stamp duty if the property is uninhabitable?

This is one of the most common questions our team gets asked – and the answer is yes, but it should be in a non-residential SDLT band.

Although you should only have to pay a non-residential rate of SDLT if your second home is deemed as uninhabitable, many people still find themselves overcharged. HMRC have not given solicitors and conveyancers the option to do this for clients, making it a very difficult relief to obtain.

But why is this?

One of the conditions for a higher rate of SDLT (3%) is that the building is used – or will be used – as a residential property when it’s bought. 

So, if the dwelling isn’t fit for anyone to live there and can’t meet its intended purpose – the higher rates shouldn’t apply. 

This happens when a home is classed as ‘uninhabitable’, best exemplified by a key ruling for property buyers back in 2019, when a couple successfully took HMRC to court over these payments. 

A closer look at the case of PN Bewley v HMRC

At Stamp Duty Claims, we use ‘PN Bewley Ltd vs The Commissioners for Her Majesty’s Revenue and Customs’ as the base law for uninhabitable property cases. 

In this ruling, Mr and Mrs Bewley took HMRC to court after they bought a bungalow in need of significant repairs.

Following new changes in SDLT laws at the time, the couple were faced with extra charges due to the fact it was a second property – with taxation calculated at the higher rate of 3%. 

In the Bewley case, the couple had bought the bungalow as a second property, as well as a plot of land. 

However, after being subjected to costly SDLT charges, they argued that the property was not a ‘dwelling’ and was uninhabitable – going against its intended use. 

To create a solid case, they submitted photographic evidence to support their claim, showing that the bungalow had no central heating, no boiler and was riddled with asbestos. 

As it was essentially a derelict property, the Tribunal ruled in favour of the couple. 

This is because the building was found to be unsuitable in its use as a dwelling, and was not used as a dwelling at the time of the purchase – so they should not have paid the higher stamp duty rate in the first place. 

They successfully claimed back £6,000 on a £200,000 property. 

This was an important decision for people who were unfairly charged higher rates of tax for uninhabitable properties than they would otherwise be liable to pay. 

Stamp Duty Refunds for Uninhabitable Properties: Everything You Need To Know

What if I bought my second property through a limited company?

The extra SDLT tax still applies to those buying an additional dwelling by an individual or a dwelling bought by a company, whether you plan to live there yourself or let it out for income purposes.

If you bought your property through a limited company and think you could be entitled to a claim, our team can still help. 

Check out our guide to SDLT especially created for limited companies here – or get in touch with a consultant today. 

Now we have the legal bits outlined, let’s explore what makes a property ‘uninhabitable’. 

When is a home classed as ‘unfit for habitation’?

One of the key components of figuring out whether clients have a solid case is determining whether their dwelling is classed as ‘uninhabitable’ in the eyes of HMRC. 

Of course, it is important to remember that HMRC looks at each application on an individual basis. This means it can be difficult to outline the exact criteria that deems a property to be ‘uninhabitable’ – which can make it tricky for people to figure out if they have a case in the first place!

As seen with the PN Bewley vs HMRC case, gathering strong evidence is one of the biggest, and most crucial, factors in securing a successful rebate or stamp duty exemption.

The following assets can be used to strengthen your application: 

  • builders’ quotes 
  • improvement notices 
  • building surveys 
  • photographs

Essentially – the more you can physically show a tribunal the extent of any existing damage or issues within your property, the better! 

But what sort of damage is HMRC looking for? 

Although there are no set guidelines for what HMRC deemed ‘uninhabitable’ or not, after years of experience structuring and submitting winning claims – we certainly know a thing or two. 

More often than not, successful cases will have one, or a combination of, the following problems: 

  • Roof Leaks
  • Structural Issues
  • Cavity wall tie issues
  • Subsidence or settlement
  • Defective lintels
  • Cracking
  • Damp
  • Mould Growth
  • Insect attack or infestation
  • Dry rot
  • Missing bathroom fittings
  • Missing kitchen appliances
  • Missing or defective plaster
  • Missing carpets or finishes
  • Missing or damaged floorboards
  • Missing / Faulty heating
  • Missing / Unsafe electrics
  • Asbestos found on the property
  • Lack of power or water throughout
  • Lead water supply
  • H&S or other issues

If your property flags up any of these issues, then we could help you create a claim. 

We do this by handling all the stress of sorting forms and correspondence, effectively building your application, collating the evidence, and issuing everything to HMRC as part of our seamless service. 

Who’s entitled to a Stamp Duty Refund?

Essentially, anyone who has bought a second home or additional property that had significant damage or issues rendering it ‘uninhabitable’ – should be eligible. 

At Stamp Duty Claims, we can help clients claim back on properties that have been bought at any time over the past four years. 

The only people who would not usually be eligible to make a claim are first-time buyers, as they will have paid a much lower rate of stamp duty when they first bought their home. 

That lower cost comes in the form of the SDLT relief that we touched on earlier – meaning that clients who have purchased just one home won’t see a significant payout.

As such, we find clients and limited companies who have bought investment properties, have an existing property portfolio or second homes that are much more suited to our criteria. 

How do you start a claim? 

It couldn’t be easier to get your SDLT journey on the move. 

All you have to do is get in touch with us on social media or arrange an assessment call through our website, and we’ll get in touch within 24 hours – at a time that suits you. 

We know your time is precious. That’s why we’ll start collecting as much information from you as possible, allowing our team to get the full scope of your potential case. 

This allows us to determine if you meet the appropriate criteria – then we can quickly get moving once everything is confirmed. 

You just need to contact your solicitor to provide some relevant documents, such as title deeds and support for your case, and we’ll take care of everything else.

During this time, our team will use a combination of expertise and evidence to craft a strong argument for you, which will then be submitted to the technical department at HMRC.

There’s no need to worry about keeping tabs on the progress of your application, as we’ll do this for you. 

If your case is successful – then great! 

If not, our tried and trusted process comes with a no-win, no-fee policy that puts you at absolutely zero financial risk or exposure, for ultimate peace of mind. 

 How long does a stamp duty refund take?

Usually, the current time for a successful case to run its course is approximately six weeks. 

This does depend on how long it takes our team to receive all the documents needed to help us structure a case, but we work speedily and efficiently to make sure that every step of the process is seamless – from the moment you first get in touch to the second the money is deposited in your bank.

Need more help with your stamp duty refund?

We offer tax advice from qualified professionals, including chartered surveyors, accountants and lawyers specialising in SDLT refunds, no matter how complex they may be.

Think you might have a case? 

Get in touch with our team of experts today and start your rebate.