If you’ve got a run-down home that you wish to renovate and re-purpose, you may be able to get stamp duty land tax refunded. In this blog article, we’ll go through how to reclaim the stamp duty you paid on your property. We’ll also offer some pointers on how to make the procedure go more quickly.
In order to qualify for the refund, your property must meet certain criteria. The first is that the property must have been unoccupied for at least 12 months prior to your purchase. Secondly, the property must be in a state of disrepair. This means that it must be structurally unsound or in need of significant repair work.
If you meet these criteria, you can apply for a refund of the stamp duty you paid on your purchase. The process is relatively straightforward, but there are a few things to keep in mind. First, you’ll need to submit your application within four years of buying the property. Secondly, you’ll need to provide evidence of the property’s condition, such as photos or a surveyor’s report.
If you’re thinking of buying a derelict property, it’s worth considering the stamp duty refund. With a little bit of paperwork, you could save yourself a significant amount of money.
If you have any further questions about the process, or if you need help with your application, please don’t hesitate to get in touch. We’re always happy to help.
Bewley Limited v HMRC
In a recent case (Bewley Limited v HMRC), the court determined that higher rate stamp duty, also known as the 3% surcharge, is not payable on the purchase of an unoccupied and badly damaged home that may only be used for development. This may translate into significant cost savings if properties are purchased in a state of disrepair
The Bewley Limited v HMRC case has had a huge impact on court decisions. The facts of the situation are as follows.
What makes a property uninhabitable In the UK
When circumstances or safety concerns are so bad that it is no longer reasonable for you to remain there or live in the property, it’s described as “unfit for human habitation.”
It’s conceivable that this is caused by the current state of affairs affecting your health dangerously. It also puts you at risk of bodily harm or damage, and it means you can’t fully utilize your house.
Because the property could not be used as a home at the time of the transaction, it was ruled inhabitable in the Bewley case.
In this case, it was determined that the property in question was not fit for human habitation due to the high amounts of asbestos discovered there and because the radiators and heating pipes had been removed. Asbestos obstructed repairs and improvements, so the court ruled that it was not suitable for human habitation.
The court ruled that the taxpayer shouldn’t have paid the 3% surcharge and this stamp duty should be refunded
Derelict property at the Effective date
The transaction’s effective date is the closing date, when the “home test” is carried out. All that matters is whether it serves as or can be used as a residence at that time, or is being built or converted; it does not matter if it has previously been utilized as a home.
Contact us if you’d like us to run a home test on your property.
What makes a home – More than modernisation
In order to be uninhabitable, a property must be unsafe and unsanitary, lacking basic utilities like a functional bathroom and kitchen as well as heating. Even if it’s an upgrading project, a home that needs to be updated and redecorated may still be liveable.
Examples of an uninhabitable property
- Damp and mould growth
- Proper heating and ventilation
- Radiation (Radon gas in soil entering property)
- Lead (Mostly in paints or waterpipes)
- High levels of carbon monoxide and other combustible products
- Uncombusted fuel gas (gas leaks leading to asphyxiation)
- Volatile organic compounds (Chemicals within many common items, like mattress packaging and vinyl flooring)
- Falling hazards (baths/showers, level surfaces and stairs)
- Electrical hazards
- Fire hazards
- Collisions and entrapment
- Position and operability of appliances
- Structural partial or total collapse
- The location was a vacant, run-down house and plot of land
- The property had a boiler removed piping was removed
The HMRC has a clear definition of a home, yet it is less precise regarding the things it does not include.
Guidelines from HMRC on what is a dwelling
Sleeping Area – A house is supposed to have enough room for sleeping. A sleeping area would generally be well-lit, offer power connections, and include a window, although not always. It will usually be distinguished from the living room.’
The Living Room – This is a room where people gather to eat, drink, watch television, and read. It’s also the location of home theater equipment and media accessories if you have any. It should include chairs, tables, cabinets, decorations, and visitors. The area would typically contain lighting as well as power points, heating elements, and a window.
The Kitchen – A room where people cook and store food. It would typically have a stove, sink, fridge, cupboards, and plenty of counter space. It should also offer power sockets, light fixtures, and possibly a window.
The Bathroom – A room that contains a toilet, sink, bathtub or shower, and a mirror. It should also have a way to dispose of sewage, running water, lighting, power points, and usually a window.
Common Questions Related to Making an Uninhabitable Claim
What if I purchase the property via a limited company or LLP?
Even if the refund is in a trust structure, it may still be claimed. The relief is available to any transaction where an Uninhabitable property is purchased.
I purchased it during the SDLT holiday can I still claim?
Yes, your refund might not be as much as you paid a reduced amount at the time of purchase.
How far back can I claim?
We can get back SDLT spent on any property acquired in the last four years.
How long does it take to get a successful claim approved?
Once you’ve supplied all of the papers we need, it takes 6 weeks on average to be paid out.
How much money can I get back?
Each claim is unique. We’ve been able to get refunds as much as 60% of the original stamp duty payment in certain situations.