Stamp duty land tax (SDLT) is a property tax that one must pay if purchasing a property or land in the UK. The amount of tax payable depends ultimately on the value of the property and what type of buyer you are. For instance, first-time buyers are exempt up to £425,000 and discounts apply after this amount. In addition, there are even exemptions for derelict properties – yet, what qualifies as an uninhabitable property seems vaguer. Read our guide to learn more about what constitutes an uninhabitable property, and whether you can claim a stamp duty refund. 

 

What Makes a House Habitable According to HMRC?

First, let’s begin with what constitutes a habitable property according to HMRC. A habitable property has basic amenities and comforts for every day, safe living. For instance, running water, heating, and access to kitchen and bathroom facilities.

According to these criteria, this would constitute a dwelling – meaning a property in which people could safely live, as they have access to the necessary amenities. 

 

What Is Classed As an Uninhabitable Property? 

In contrast, defining an uninhabitable property is somewhat vaguer. Generally, an uninhabitable property would cause risk of physical harm or injury, as well as cause ill health, and does not allow you to access all the facilities in your home properly. 

Below are some more factors which would constitute a property as unsafe to live in, or rather, be unfit for dwelling purposes:

  • A non-functioning bathroom or kitchen
  • No running water 
  • An unsafe electrical system 
  • Mould or asbestos issues 
  • Presence of unsafe chemicals e.g. lead in older paints 
  • A non-standard roof 
  • Structural damage which poses risk or injury 
  • A property which is not weather-proof 
  • Animal or insect infestations 

 

Is Stamp Duty Payable On an Uninhabitable Property? 

A stamp duty refund is essentially a tax you can reclaim for HMRC. People often miscalculate their original stamp duty tax and overpay HMRC, and so are eligible to reclaim this money through HMRC themselves, via a solicitor or even a stamp duty rebate expert company. 

In some instances, you may be entitled to not pay stamp duty on an uninhabitable property or even be eligible for a refund. The recent case of Bewley Limited v. HMRC in 2019 highlighted what constitutes an uninhabitable property as well as who can apply for a stamp duty refund.

Mr Bewley’s home, at the time of the transaction, could be defined as uninhabitable. The property, which had the presence of asbestos and no heating pipes or radiators, was therefore deemed the house inappropriate for dwelling purposes. Consequently, the usual 3% surcharge bought on a second home was no longer applicable. 

Since the success of this case, it has meant that many more homebuyers and developers have been able to purchase uninhabitable properties and be exempt from paying some stamp duty. However, in such cases, people must be able to prove that at the time of purchase, the property was not fit for everyday living purposes.

Furthermore, it is important to remember that an uninhabitable property, or even an unmortgageable property, differs from one that simply requires redecorating or renovating. 

 

How Do I Claim a Stamp Duty Refund on an Uninhabitable Property?

Claiming a stamp duty refund is straightforward. The process can be done by yourself, through a solicitor or even a stamp duty rebate company. Applying for a stamp duty refund with HMRC can either be done online or via post. 

Simply fill out the form, provide the correct information and then you can wait for a response. This process applies to all exemptions, whether it be you overpaid as a first-time buyer or purchased a property which was uninhabitable at the date of the transaction. 

It is important, nonetheless, to claim a stamp duty refund as soon as possible – as delaying this could result in missing out on the money you are owed.