SDLT – Not suitable for use as a dwelling claims

16 January, 2025

HMRC has seen a spike in Stamp Duty Land Tax (SDLT) repayment requests where it’s claimed a property is not suitable for use (NSFU) as a dwelling so the lower, non-residential rates of SDLT apply. HMRC found over 95% of NSFU claims are incorrect and fell well below the required threshold.

Conveyancers and their clients must be wary of anyone offering their services to make any claim to reduce their SDLT charge (either pre or post transaction) because the property is uninhabitable or in need of repair. HMRC is taking action against dishonest tax agents who encourage or facilitate customers making false claims for expenses, rebates, or tax credits. HMRC has a range of civil and criminal powers to use to disrupt or investigate, with a view to prosecution, those that cause harm to the tax system.  If clients allow someone to make an inaccurate claim on their behalf, they risk having to repay all of the tax claimed, including any fees that may have been deducted, plus interest and penalties. Conveyancers’ involvement in any such cases will also be considered by the CLC.

Clients considering making an NSFU claim should be made aware that whether a property has deteriorated or been damaged to the extent that it no longer comprises a dwelling is a question of fact and will only apply to a small minority of buildings.

When considering whether or not a property is suitable for use as a dwelling, you should note that:

• Being suitable for use as a dwelling does not mean the same thing as ready for immediate occupation, 
• If a property has previously been used as a dwelling, this will be relevant for considering whether it is suitable for use as a dwelling, 
• There is a clear distinction between a derelict property that has structural defects that would make the property dangerous to work on and/or live in and a dwelling that is in need of modernisation, renovation or repair but has no such structural defects.

Find out more about NSFU on HMRC’s Youtube channel: Stamp Duty Land Tax: when is a property not suitable for use as a dwelling?

Further reading: Not suitable for use as a dwelling (uninhabitable dwellings) on gov.uk.