Homebuyers warning

Properties needing repairs still count as homes and false claims to recover Stamp Duty Land Tax could mean big tax bills and penalties.

HMRC has issued a warning to homebuyers about rogue tax agents promoting false Stamp Duty Land Tax (SDLT) repayment claims, especially those based on the condition of properties. Following a recent Court of Appeal decision, it has been confirmed that properties requiring repairs remain liable for residential rates of SDLT if they retain the fundamental characteristics of a dwelling. This applies even if the properties are temporarily uninhabitable.

Some agents exploit this by misleading buyers into believing they can reclaim SDLT by arguing the property is “non-residential.” These agents often charge hefty fees and leave homeowners liable for repayment of the tax, penalties, and interest.

HMRC’s press release on the matter provides an illustrative example of a person who bought a house in London for £1,100,000 with his solicitor filing the SDLT return and SDLT being calculated at the residential rates (£53,750). The home required some modernisation and repair.

The homebuyer was then targeted by a repayment agent who claimed he could recover £9,250 in SDLT due to property repairs. The agent took a 30% fee, and the homebuyer received £6,475. Later, HMRC carried out a compliance check and found the property was residential all along. This meant that the homebuyer was left owing the full £9,250, plus interest and penalties, with the agent refusing to assist.

The case reinforces that a property’s poor condition does not alter its classification as a dwelling if it is structurally sound and previously used as a home. SDLT claims that are invalid can result in serious financial consequences for the buyer, who is ultimately responsible for the accuracy of any SDLT repayment submission.

We would be happy to help you consider where you are eligible to make a claim without incurring unnecessary fees or risks.

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