We’ve observed a rise in inquiries regarding when residential properties are exempt from stamp duty land tax due to their unsuitability for use as dwellings.
On March 19, 2016, HMRC released guidance on this matter in their Stamp Duty Land Tax Manual, which was most recently updated on January 11, 2024.
According to the guidance, a property that “has sustained damage to such an extent that routine repairs, replacement, or modernization cannot adequately address the issues” may not be considered habitable.
HMRC makes a clear distinction between derelict properties and those requiring “modernization, renovation, or repair.” The core consideration, as per the guidance, is whether the property lacks structural or physical integrity to the extent that it poses a danger for living in or carrying out work on it.
The guidance includes non-exhaustive examples of works that do not render a dwelling uninhabitable, such as:
- Removing bathroom or kitchen facilities for replacement purposes.
- Significant repairs are needed for windows, floors, or the roof.
- Installing a new central heating boiler and associated piping.
- Dealing with unsafe electrical wiring.
- Utilities are being turned off.
- Dealing with pest infestations.
- Damp proofing or plaster damage.
- Addressing flood damage.
HMRC considers these to be “common issues that can be resolved relatively quickly.” The guidance specifies examples of conditions that would deem a residential property unsuitable for use as a dwelling:
- The presence of high levels of asbestos requires deconstruction of the property before repairs can commence.
- Existence of high radioactive contamination.
- There is a high risk of structural collapse.
- Presence of hazards that might prompt a local authority to issue a prohibition notice restricting property use.
The inquiries we receive regarding claims of uninhabitability typically align with common improvements and maintenance works needed for residential properties. According to HMRC guidance, a property where, for instance, the bathroom or kitchen has been removed for replacement would not qualify as uninhabitable.
Our advice on tax matters, including stamp duty and land tax, is limited. If you believe a residential property you are buying might qualify for Stamp Duty Land Tax relief due to being uninhabitable, we recommend consulting with an accountant specialising in Stamp Duty Land Tax.
For legal advice on property sales or purchases, you’re in the right place. We have a team of experienced conveyancers ready to ensure a smooth transaction. Contact us today at 01625 460281, via email, or through our online chat.
