We've noticed a growing number of inquiries regarding the exemption of residential properties from Stamp Duty Land Tax, particularly when they're deemed unsuitable for dwelling purposes.
On March 19, 2016, HMRC issued guidance on this matter in their Stamp Duty Land Tax Manual, with the latest update made on January 11, 2024.
According to the guidance, a property that has undergone such extensive damage that normal repair, replacement, or modernization cannot rectify the issues may not qualify as habitable.
HMRC distinguishes between derelict properties and those merely in need of modernization, renovation, or repair. The core concern, as per the guidance, lies in whether the property lacks structural integrity or poses physical risks that would render it unsafe for occupancy or renovation.
Contrary to previously accepted characteristics, the guidance now furnishes examples of works that do not render a property uninhabitable, including:
  • Removal of bathroom or kitchen fixtures for replacement.
  • Significant repairs to windows, floors, or roofs.
  • Replacement of central heating systems and associated piping.
  • Addressing unsafe electrical wiring.
  • Temporary utility shutdowns.
  • Pest infestations.
  • Damp proofing or plaster damage.
  • Flood damage.
HMRC views these as common issues that can typically be resolved swiftly. Conversely, the guidance outlines examples of works that would preclude a property from being deemed suitable for dwelling, such as:
  • High levels of asbestos necessitating deconstruction before repair.
  • Presence of significant radioactive pollution.
  • Elevated risk of structural collapse.
  • Hazardous conditions leading to a local authority issuing a Prohibition Notice against property use.
Most inquiries we receive regarding uninhabitable property claims tend to align with common improvement or maintenance needs for residential properties. Based on HMRC guidance, properties where fixtures like bathrooms or kitchens have been removed in preparation for replacement wouldn't be classified as uninhabitable.
This will now significantly reduce the amount of accepted cases of uninhabitability relief across the UK.