Stamp Duty Rebate for Unmortgageable Property

Unmortgageable properties, in short, are ones which are most likely to not be accepted by lenders for a long-term mortgage. Properties can be deemed unmortgageable due to a variety of factors, however, these are not always made clear to potential buyers or sellers.

What’s more, many people in the UK also end up buying properties which are unmortgageable yet still end up paying stamp duty – or what is also formally known as Stamp Duty Land Tax (SDLT), which is an expensive part to buying a property.

Though stamp duty cannot be avoided, as doing so will lead to fees and legal problems, there are exemptions in place where it might not be payable at all or a discount may apply. An unmortgageable property is an example where such rules may apply, as there are certain loopholes or exemptions possibly not clearly defined to buyers.

If you have bought, or are in the process of buying, a property yet are unsure if it is deemed unmortgageable, find out with Stamp Duty Rebate. We’ve helped people in the UK get thousands of pounds back in stamp duty rebates or refunds. Find out if this might apply to you today.

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Stamp Duty: Who Has to Pay?

Those that buy land or property in England and Northern Ireland with a value over £250,000 are required to pay stamp duty. The purchaser will then pay the stamp duty either by themself or through their solicitor once the purchase is complete.

Nevertheless, there are exemptions to stamp duty. For instance, first-time buyers in the UK are exempt from paying any stamp duty on properties or pieces of land worth up to £425,000. Following this threshold, discounts then apply up to £625,000. After this, normal tax rates apply. This is done to help first-time buyers get onto the property ladder.

There are, however, other exemptions. For instance, those that purchase properties which are deemed uninhabitable or unmortgageable. While recent case law has highlighted that uninhabitable properties are exempt from certain rates of stamp duty, it is not always made clear to purchasers.

What Is an Unmortgeagble Property?

Generally, an unmortgageable property is one which is not deemed fit for living nor appropriate for mortgage lending. A property is usually categorised as unmortgeable during the surveying process, or is highlighted by the seller before it is listed for sale.

An unmortgageable property is also often referred to as ‘unfinanceable’ or ‘non-mortgageable’. Usually, properties are deemed unmortgageable due to legal or physical risks.

For instance, a property may be defined as unmortgageable if the following criteria applies:

No Kitchen or Bathroom

Having no kitchen or bathroom means there are no facilities on-site to fulfil everyday living, or habitable, requirements. Nonetheless, these can be fitted after the property is bought.

Two Kitchens

On the other hand, having two kitchens in or on a property may be a red flag to lenders. They may view this as a risk of sub-letting occurring once the property is bought.

Close-Proximity to Commercial Properties

Properties which are close-by to commercial properties, such as restaurants and shops, are also a risk to lenders. They may feel that properties, such as flats built on top of commercial properties, are at risk of being bought by businesses.

Short-Lease Length

Properties which have short-leases, usually under 80 years, are unmortgageable. Extending a lease is expensive, so often mortgage lenders will avoid properties which have short-leases.

Non-Standard Construction

Properties which do not fulfil standard construction requirements, such as using materials like brick, mortar, or slate are deemed unfit for living. By using non-standard materials and structures, properties will most likely not be accepted for mortgages. It will also prove difficult to get insurance.

Weak Infrastructure or Defects

Properties that have structural problems pose a risk to life, and evidently, will not be considered by mortgage lenders. Likewise, properties with defects, such as damp or mould as a result of leak problems are also not considered during mortgage applications.

Uninhabitable Properties

The term ‘uninhabitable’ is a broader term, and refers to properties which are not fit for everyday living. For instance, properties which pose health hazard risks. The presence of harmful chemicals, plants, nearby hazardous sites (e.g. landfills or mines) all make a property hazardous. By consequence, they will also be unmortgageable.

Can I Buy or Sell an Unmortgageable Property?

Though many factors may suggest a property is unmortgageable, there is no set definition according to HMRC. The above criteria will certainly affect how easily you are accepted for a mortgage application. Nonetheless, there are some banks and mortgage lenders in the UK that will still consider your mortgage application. Higher interest rates, however, will likely apply and may leave you unable to repay the mortgage.

Meanwhile, those looking to sell unmortgageable properties are advised to fix any of the issues which deem the property is unmortgageable. For those that are unable to sell an unmortgageable house, there are always alternative selling methods such as through companies.

Do You Pay Stamp Duty on an Unmortgageable House?

There is no set definition of what an ‘unmortgageable house’ is according to HMRC. Therefore, it leaves a somewhat grey area when it comes to stamp duty. However, properties which HMRC does not consider a ‘dwelling’ (appropriate for everyday living) will have discounted stamp duty rates.

While unmortgageable and uninhabitable properties are rare, they do exist. People that buy properties which simply need some modernisation or repair are not considered unmortgageable. In contrast, properties which at the time of purchase were not suitable for dwelling are considered uninhabitable, or rather, unmortgageable.

For example, those that already owned properties and bought an additional one (or part of one) are usually required to pay a 3% surcharge on top of stamp duty on properties or land worth over £40,000. However, if properties were deemed uninhabitable, or unmortgageable, at the time of purchase then they are likely entitled to a stamp duty rebate in the surcharge originally paid to HMRC.

Many will not be aware that they bought such properties, and may overpay in stamp duty. Therefore, you can get in touch with us here at Stamp Duty Rebate to find out if you are owed any money in a stamp duty rebate (or often known as a refund) and whether or not your property could be defined as unmortgageable.

Recent claims

How much can I expect to get back should my claim be valid and approved?

Every case is different. In some cases, we were able to arrange a rebate of up to 60% of the original SDLT paid. Some of the cases that we’ve successfully claimed refunds for:

Steven B Primary Residence
Rebate Received £9,337.00
Purchase price £1,100,000.00
Stamp Duty Paid £53,750.00
Gary H Primary Residence
Rebate Received £26,795.00
Purchase price £1,485,000.00
Stamp Duty Paid £89,750.00
Matt S Buy to Let
Rebate Received £8,817.35
Purchase price £274,000.00
Stamp Duty Paid £11,920.00
Ben G Primary Residence
Rebate Received £17,397.00
Purchase price £1,260,000.00
Stamp Duty Paid £69,750.00
Zev S Buy to Let
Rebate Received £13,044.95
Purchase price £410,000.00
Stamp Duty Paid £22,800.00
Ashkey P Buy to Let
Rebate Received £2,502.33
Purchase price £82,500.00
Stamp Duty Paid £2,475.00
Sophia L Primary Residence
Rebate Received £42,478.00
Purchase price £1,680,000.00
Stamp Duty Paid £115,350.00
Jonathan P Buy to Let
Rebate Received £2,340.51
Purchase price £77,500.00
Stamp Duty Paid £2,325.00

How Can Stamp Duty Rebate Help with Unmortgageable Properties?

Stamp Duty Rebate has been working to help people get the money they are owed. We specialise in helping people get stamp duty rebates, or also known as stamp duty refunds. Filing for a stamp duty rebate, nonetheless, can be time-consuming and confusing when done without the experts.

That’s why, here at Stamp Duty Rebate we work to get people the money they deserve. If you believe your house was unmortgageable at the time of purchase then you may be entitled to thousands of pounds. Likewise, if you are in the process of buying a property yet are struggling to find a mortgage then we may be of help. 

Get in touch with us today to find out more information regarding unmortgageable properties, or alternatively fill out one of our online claim forms.

Frequently asked questions

What qualifies as a defect?

In 2019, a First Tier Tribunal heard a case known as ‘The Bewley Case’ (P N Bewley Ltd v HMRC [2019] TC6951) that set a further legal precedence for reducing high rates of Stamp Duty. Bewley successfully argued that, since his property suffered from substantial defects at the time of purchase, he should have been charged the non-residential rate of stamp duty, rather than the higher residential rate.
The Tribunal ruled that where a residential property was not suitable for use as a dwelling, the lower non-residential rate of stamp duty should have been applied. We can advance claims based on the following (non-exhaustive list of) defects:

  • Defective Heating System
  • Unsafe Electrics
  • Damp/Mould/Rot
  • Structural Issue
  • Non-operational Bathroom or Kitchen
  • Subsidence
  • Asbestos
  • Severe Roof Leaks

If you purchased a residential property which suffered from any of the above, or similar defects, you might be eligible for a stamp duty rebate.

What do I need to prepare for my SDLT rebate assessment?
You would need to provide us with some of the legal documents received from your solicitor at the time of purchase; SDLT5 Certificate, TR1, Sales Contract, Completion Statement. 

We would also require relevant evidence such as surveys, repair invoices and images.

What are your fees in the case of a successful SDLT refund claim?
We operate on a ‘No Win No Fee’ basis. 

In the case of a successful claim, our service charge is 30% + VAT of the total rebate and interest received. Our minimum fee is £1,000 + VAT.

HMRC has an allowance to revisit claims within 9 months of pay-outs. We fully indemnify claims and, where we are unsuccessful in defending a challenge from HMRC, we return, not only the 30% +VAT fee paid to us, but also any interest or penalties levied by HMRC within this 9 month period. This is a unique part of our service.

How long can I claim after purchasing a property?
HMRC won’t accept stamp duty rebate claims for property purchases that took place more than 4 years ago.