Are you considering buying a property that is uninhabitable? If so, you need to be aware of the potential implications of your tax bill. In this blog post, we will take a look at SDLT on uninhabitable property and what makes a property uninhabitable.

What makes a property uninhabitable?

There are several factors that can make a property uninhabitable, such as significant structural damage, mould growth, or a lack of running water.

In some cases, it may simply be that the property does not meet minimum standards for habitability, such as having no heat, or electricity or not having facilities such as a kitchen or bathroom.

If a property is found to be uninhabitable, it can be very difficult to sell, as potential buyers will be put off by the thought of having to make significant repairs. As a result, SDLT on uninhabitable properties may be waived to make the sale more attractive.

HMRC has given guidance on what it classes as an uninhabitable property for stamp duty purposes based on how suitable the property is as a residence. There is a difference between an uninhabitable property and a property that needs repairs and it is important to be aware of this when thinking about applying for a stamp duty refund for uninhabitable property.

According to HMRC, a dwelling is a property that has:

A property is seen to be uninhabitable when safety conditions are so poor that it is no longer reasonable for someone to live within the property, this is usually due to significant structural issues. HMRC outline examples of repairs, renovations and issues that will not make a property uninhabitable as:

These are all common issues which can be rectified relatively quickly and therefore they do not constitute structural changes that would mean that the building is no longer suitable for use as a dwelling.

Examples of when a property will be considered not suitable for use as a dwelling include:

The test of whether the property is suitable for habitation is carried out on the effective date of the transaction and if it can be used as a dwelling or is being built at that time. The test for unsuitable living conditions is stringent and usually, a lack of basic amenities is a clear sign of habitability. A residence that requires renovation will still be classed as a habitable property.

How To Get A Stamp Duty Refund On Property That Is Uninhabitable?

Stamp Duty Land Tax (SDLT) applies to any uninhabitable property that is purchased in England and Northern Ireland. The tax is levied on the total value of the property, including any stamp duty that may be due.

Each case is judged separately so legal advice is strongly advised before making a purchase.

The process to apply for a stamp duty refund for uninhabitable property is simple and can be done independently however, it is always best to contact our CapEx Tax specialists who can assist you with your application and make sure all documentation is accurate before applying for a refund to ensure that the process is as smooth and as quick as possible. If you need help processing your application for a stamp duty refund for an uninhabitable property then contact CapEx Tax Specialists today.

 Is There A Stamp Duty Exemption For Uninhabitable Property?

When purchasing a second property a 3% stamp duty land tax surcharge usually applies. If the house is deemed uninhabitable by HMRC then this surcharge is typically waived. 

You won’t pay stamp duty on an uninhabitable property if you buy a property which doesn’t have basic amenities provided within its boundaries. In these circumstances, you will not be required to pay the higher rates of stamp duty.

Usually, it is common for people to overpay stamp duty land tax due to miscalculations. In these circumstances, you can then apply for a stamp duty refund for a property that is uninhabitable. 

Already purchased a property?

If you have already purchased a property that was uninhabitable at the time of purchase you may be eligible for a stamp duty land tax refund. You will require proof from the time of purchase as to the state of the property such as dated photographs.

The expert team here at CapEx Tax will happily help you through the process so get in touch today.