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The 'Stamp Duty Holiday' - Can you get a refund from your recent purchase?

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The Stamp Duty Holiday - Can you get a refund from your recent purchase?

Following on from the Chancellor’s announcement in July on the immediate but temporary changes to Stamp Duty Land Tax (“SDLT”), the most common question now will be whether you can obtain a refund if you completed prior to this date.

SDLT is due within 14 days from, and including, the date you complete on your purchase, therefore if you have completed before 8th July, unfortunately you cannot apply to HM Revenue & Customs (“HMRC”) for a refund.

However, if you have exchanged contracts on, or before, 8th July but have not completed, you will benefit from the SDLT holiday. Assuming your conveyancer is dealing with the SDLT form on your behalf, they will ensure that the form to be submitted will reflect this change.  

If you are in a situation where you completed before 8th July and have already sought advice about the possibility of a refund, please be cautious about the advice you are given.

If the property you have purchased is habitable as a dwelling on the date of completion, HMRC will not consider your application for a refund. However, should the property you have purchased be uninhabitable on the date of completion (and therefore not suitable for use as a single dwelling), HMRC may consider your application. A First-tier tribunal decision in January 2019 which established that the SDLT surcharge on an additional property is not payable where the property is uninhabitable at the time of purchase is further explained here.

There has been very little guidance from HMRC since the decision was reached in the case of PN Bewley Limited v HMRC [2019]. However, HMRC have included the following wording since 1 October 2019 to the SDLT Manual:

“A residential property that is no longer habitable as a dwelling, due to dereliction for example, would not be residential property, on the basis that it is not suitable for use as a dwelling.”

“However, there is a clear distinction between derelict property and a dwelling that is essentially habitable, but in need of modernisation, renovation or repair, which can be addressed without materially changing the structural nature of the property. In this case, if the building was used as a dwelling at some point previously and permission to use as a dwelling continues to exist at the effective date of transaction, it will be considered suitable for use as a dwelling. Whether a property is derelict to the extent that it no longer comprises a dwelling is a question of fact and should only apply to a small minority of buildings.”

“The removal of, for example, a bathroom or kitchen facilities before sale will not be regarded as making a building unsuitable for use as a dwelling. These are internal fittings and would not constitute structural changes to the dwelling that would mean the building is no longer suitable for use as a dwelling. A new kitchen or bathroom suite could be fitted relatively quickly and cheaply and is a common improvement to a dwelling. Likewise, substantial repairs required to windows or a roof would also not make the building unsuitable for use as a dwelling. Other examples of issues which may be easily addressed in the short term include the need to switch services back on and dealing with an infestation of pests.”

Furthermore, the First-tier tribunal decision in Fiander and Brower v HMRC [2020] considered the issue of disrepair when a claim for Multiple Dwellings Relief (“MDR”) was rejected. The tribunal held that “’suitable for use’ does not mean ‘ready for immediate occupation and therefore a state of disrepair did not render the property unsuitable for use as a dwelling”.

For any application to HMRC for a refund or review into the application of a SDLT relief, HMRC will review these on a case by case basis. We would therefore advise you to obtain an opinion as to whether a property is likely to be considered uninhabitable for SDLT exemption or rebate purposes.

Contact one of our property litigation experts Louise James or Claire Bunton at contact@duttongregory.co.uk or by calling 02382 148692.