New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

LANDLORDS FINANCIAL BLOG

All

Landlords Tax Property Tax Landlords Tax Returns Property Accounts Property Tax Return Landlords Accounts Chartered Accountants Online Accountant Online Bookkeeping Online Tax Returns Tax Returns Your Online Accountant Your Online Bookkeeper Businessadvice Accounting Tax Cashflow Smallbusiness Businesstips Property Accountant Taxplanning VAT Furnished Holiday Lettings Inheritance Tax Property Property bookkeeper Annual Exempt Amount Business Rate Capital Allowances Capital gains tax property Compliance Deductibleexpenses Employment Allowance Finance Financialmanagement Holiday Lets Tax Landlords Accountant Landlords Financial Making Tax Digital Mileage Allowance Mobilephones Overlaprelief Pension Ppr Property Company Tax Property Tax Deductible Expenses Rent a Room Relief SDLT Small Business Taxreturn TimetoPay VAT invoice 60 day capital gains limit Accrualsbasis Acquisitions Advisoryfuelrates AI AirBnB Allowable Business Expenses Alphabet shares Amap Annual Tax on Enveloped Dwellings Appeal Assessment Asset disposal Associated Company Associated Company Tax Rules Bad Debt Bad Debt Tax Relief Baddebts Badgesoftrade Beancounter Benefits in Kind Breakeven Point Budget Business advice Business asset deferment Business coach Business Continuity Business Entertainment Business Expenses Business Rates Relief Business tips Businessgrowth Businesstypes Buy or Lease Equipment Buytolet Capital Allowances for Cars Capitalallowances Car Capital Allowances Carry Back Losses Cgt Change of Tax Basis ChatGPT CIS Scheme Common Tenant Companies Expenditure Companies House Company Account Deadlines Company Account Filing Company Strike Off Company Tax Efficient Property Companyassociation Companyloanstaxfree Compulsory Strike Off Construction Industry Scheme Contacthmrc Contentmarketing Corporation Tax Losses Corporation Tax New Regime Corporation Tax Rates CorporationTax Costs Cryptocurrency Deductible Business Expenses Depreciation Development Directors Directors Loans Directorsloans Disallowable Business Expenses Discovery Disincorporation Dividend allowance Dividend Allowance Reduction Dividend Planning Dividends DLA Domestic Items Tax Relief Dormantcompany Employee Discount Employee management Employeecompensationpayments EmployeeOwnershipTrust Endoflifeplanning Enquiry EnterpriseResourcePlanning Entrepreneurmindset Equity Expenses Expenses Allowed For Tax Eyetests FHLs Flipping Furnished Holiday Lets Tax Gift Aid Gifts Growthhacks Help to pay tax bills HICBC HMO Licensing Fees HMRC complaints Holdoverrelief Holiday Lettings Tax How to apply for a Business Loan How to Extract Profit Humour Ihtexemptions Illegaldividends Influencers Inheritance Tax Nil Rate Band Interestrestriction Investment Property Tax Joint Tenant Keypersoninsurance Landlord Repairs Landlords Self Assessment Late vat registration LBTT Leadgeneration Leadmagnet Leanbusinessmodel Letting Agent Disbursements Letting Agent Recharres Lettings Relief Limitedcompany Long Lets Tax Longservice LTT Mainresidencerelief MakingTaxDigital Managed Lets Management accounting Mileage payment Minimumwage Mixedusesdlt Mortgage costs Mortgage Interest Relief New property Newcompanycarfuelrates Newnicrules NIC 2023 to 2024 NIC savings Nmwerrors Non-taxable Optiontotaxvat Overpayment Relief Paperform Partnership Partnershipbusinesses Parttime Patternofoccupancy PAYE PAYE by Direct Debit Penaltypoints Pension Payments Tax Relief Performance-reviews Periodsofabsence Personal finance Personalallowance Personalguarantees Postcessationrelief Profit Profit-and-loss Property Allowance Property Development Company Property Incorporation Property Investment Company Property investor accounts Property investor tax tips Property Letting Property Rental Business Property Trading Propertyallowance Propertycompany Recharges by Estate Agents Regularpayments Reimbursedexpenses Rent your drive Rental Rentaroom Research & Devolopment Residence Relief Residential property gains Retail stock control Retainedprofits Room for rent tax SA Salary SDLT changes Section 455 Tax Selective Licences Landlords Self Assessment Self-employednic Selfemployed Seperation Servicecharges Settlementslegislation Simplified Expenses Smallbiz Smallbusinessraterelief Software Spring Budget Staffparties Stamp duty SuccessJourney Tax Allowance on Driveways Tax Allowances Tax Deadlines Tax Filing Deadlines Tax Free Childcare Tax free income Tax on Company Vans Tax position Tax Relief Tax tips for landlords Taxbillpayments Taxconsequences Taxincentives Taxposition Taxpositionassets Taxrelief Taxreliefs Taxses Terminationpayments Tips Trade professional Transfer Assets Transfer Assets Between Spouses Undisclosedincome Unpaid Rent VAT Bad Debt Relief VAT Deadlines VAT Disbursements VAT Penalties VAT registration Vatpenalties Vatregistered Vatregistrationthreshold Wellbeing

TAGS

Is a derelict property still a residential property for SDLT purposes?

November 1, 2023

Is a derelict property still a residential property for SDLT purposes?

The issue of whether a derelict a residential property and liable to stamp duty land tax (SDLT) at the residential rates was considered by the First-tier Tribunal.

The appellants, Mr and Mrs Mudan, purchased a property in London for £1,755,000. As they already had another residential property, they paid SDLT at the residential rates inclusive of the 3% supplement. They subsequently filed an amended return on the basis that the degree of work needed to make the property suitable for occupation meant that it was not a residential property at the transaction date, and therefore SDLT should have been paid at the lower non-residential rates. HMRC opened an enquiry into the return and concluded that the property was suitable for use as a dwelling at the completion date, and hence the higher residential rates applied. The appellants appealed.

State of the property

Although the property had been occupied as a dwelling shortly before completion, it had been extensively vandalised. The points of entry had been broken, there was an ‘unbearable smell’ in the kitchen, the kitchen units had all been broken, none of the utilities worked and the gas and the electricity were unsafe. All the rooms were a mess. The boiler had been ripped off the wall in the boiler room and, while some of the bathrooms were in a reasonable condition, others had been damaged. The family were unable to move into the property for ten months until work to make it habitable had been completed.

The tribunal judge found that while the property was structurally sound, it was not in a state that a reasonable buyer would consider as habitable. For this to be the case, extensive work was needed, including rewiring, installation of a new boiler and kitchen units, repairing windows and removing rubbish from the garden.

The test

For disrepair to prevent a property from being classed as a dwelling it must be so fundamental that the property would need to be demolished. Previous cases set the bar high – faulty cladding of a type used on Grenfell Towers was not deemed sufficient to render a property derelict, although the presence of asbestos meaning the property had to be demolished and could not be safely occupied was.

Consequently, while it was accepted that the property was in a bad state of disrepair, this could be remedied, and the property occupied as a dwelling. At the transaction date, the property was a dwelling, albeit out of repair. Consequently, SDLT was due at the higher residential rates.

SDLT

Landlords Tax

Landlords Accounts

Landlords Tax Returns

Property Tax

Property Accounts

Property Tax Return