A property needing repair is not the same as a property unsuitable for use as a dwelling, and the Court of Appeal confirmed exactly that in 2025. If you have been contacted by a claims firm suggesting you can reclaim stamp duty land tax (SDLT) because a property you bought was "uninhabitable" at completion, the bar for that argument to succeed is higher than the marketing suggests, and getting it wrong can mean repaying the refund with interest and a penalty on top.
Why would a property qualify for a stamp duty refund at all?
The starting point is the higher rate of SDLT that applies when you buy an additional residential property, on top of a home you already own. HMRC's guidance on the higher rates for additional dwellings sets the current bands from 1 April 2025 at 5% on the first £125,000, 7% on the next £125,000, 10% on the next £675,000, 15% on the next £575,000, and 17% above £1.5 million, added on top of the standard residential SDLT rates.
These higher rates apply to residential property. If a property is truly not suitable for use as a dwelling at the time you buy it, it can instead be treated as non-residential, which carries lower SDLT rates and does not attract the additional-dwelling surcharge at all. That difference in tax treatment, applied to a six or seven-figure purchase, is what the claims industry has built a business model around.
Why am I being contacted by an SDLT refund claims firm?
Landlords, especially those who bought a run-down or unmodernised property, are a common target for cold calls and unsolicited emails from firms offering to "check" whether they overpaid stamp duty. The pitch is usually that a property needing rewiring, a new kitchen, a new bathroom, or structural repair at the point of purchase should have been taxed at the lower non-residential rate, and that the firm can recover the difference, often for a percentage-based fee taken from whatever HMRC repays.
Some of these claims are genuine. Many are speculative, built on a version of the "uninhabitable property" argument that the courts have now specifically rejected.
What did the Court of Appeal actually decide?
In 2025, the Court of Appeal considered a case where the buyers had reclaimed stamp duty on a house that needed rewiring, replumbing, a new boiler, roof repairs and work to fix water ingress, arguing it was not suitable for use as a dwelling at completion and should have been taxed at the lower non-residential rate. The property had been lived in and mortgaged as a home shortly before the purchase.
The court disagreed, upholding two earlier tribunal decisions against the buyers. The principle it confirmed is straightforward: a property does not stop being a dwelling for SDLT purposes simply because it needs work. The test is whether the property retains the fundamental character of a home, not whether it is move-in ready on completion day. A property that actually lacks basic living facilities, or is in a condition that goes well beyond ordinary disrepair, is a different question, but "it needs a new kitchen and rewiring" does not, on its own, get you there.
This was the third time the same buyers lost this argument, having already failed at the First-tier Tribunal and the Upper Tribunal before the Court of Appeal confirmed the position. It reflects a consistent direction across the tribunals: claims based on ordinary disrepair, however extensive, are not succeeding.
Common claims-firm arguments and how they hold up
What is the actual risk if a speculative claim fails?
If a refund is paid and HMRC later opens an enquiry and decides the property was suitable for use as a dwelling after all, you are liable to repay the refunded tax. Interest runs on tax that should not have been repaid, and HMRC's current late payment interest rate is 7.75% from 9 January 2026. Depending on how the claim was made and presented, a penalty for an inaccurate claim can also apply. The claims firm that submitted the argument and took a fee from your refund is very unlikely to be the one paying that back.
When can a legitimate claim exist?
Legitimate cases do exist, and they tend to share features that go well beyond a property simply needing modernising: severe structural problems, contamination such as asbestos that prevents habitation, or a property bought specifically for demolition rather than occupation, where the facts support treating it as something other than a dwelling from the outset. These cases turn on the specific condition and intended use of the property, evidenced at the time of purchase, not on a general sense that the house was "a real project."
If you are unsure which side of that line your purchase falls on, that is a conversation to have with an adviser who will look at your specific facts, not one to have with a firm whose fee depends on you making the claim.
Worked example
Example. Consider a landlord who bought a Victorian terrace two years ago as an additional property, paying the higher SDLT rate because he already owned his own home. The house needed a new kitchen, rewiring and damp treatment, but it had a working bathroom and had been rented out as a home until shortly before he bought it. A claims firm contacts him, citing the property's condition at purchase and offering to pursue a refund on a no-win, no-fee basis in exchange for a percentage of anything recovered.
Before agreeing, he takes the claim to his accountant. She points out that the property's condition mirrors the case the Court of Appeal has already ruled on: it needed work, but it retained a working bathroom, had recently been lived in, and there is no evidence of the kind of severe defect, missing basic facilities, contamination, or structural failure, that has supported a successful claim elsewhere. She advises against submitting the claim, explaining that HMRC could later reclaim the refund with interest if it opened an enquiry, and that the claims firm's fee would already have been taken by then. He declines the claim.
What this means in practice
Checking whether a property actually met the higher-rate SDLT test at the time you bought it is something you can start yourself: gather the paperwork from the purchase, the condition report or survey if you had one, and any evidence of how the property was being used immediately beforehand.
Deciding whether a claim has real substance, and structuring it properly if it does, is not something to leave to a firm whose income depends on you saying yes. Get an independent view first, from someone who is not paid a percentage of the outcome. If you are weighing up how to hold additional property more broadly, our guide to rental property in a limited company versus personal ownership covers a related decision landlords often face at the same time, and our tax planning page covers the wider picture.
Talk to us for a straight second opinion
If you have bought an additional property that needed significant work, or a claims firm has approached you about a stamp duty refund, speak to the Vision Consulting property team before you agree to anything. The first conversation is about looking at the actual facts of your purchase against the current legal test, whether or not that supports a claim. Call us on 020 8554 2135 or email info@visionconsulting.co.uk, or get in touch via our contact page, and a senior manager will take your enquiry personally.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances.