Measure

Stamp duty land tax (SDLT) - Multiple Dwellings Relief

The measure

Mutiple Dwellings Relief (MDR) will be abolished from 1 June 2024. This follows an HMRC consultation which ran from 30 November 2021 to 22 February 2022 on “Mixed Property Purchases and Multiple Dwellings Relief” which included options to improve fairness and reduce abuse of the relief, and a government-commissioned external evaluation of MDR which showed no strong evidence the relief is meeting its original objectives of supporting investment in the private rented sector.  MDR is a bulk purchase relief which is available to any purchaser buying two or more dwellings in a single transaction, or linked transactions, and allows the purchaser to calculate the tax based on the average value of the dwellings purchased as opposed to their aggregate value.

 

Who will be affected?

Purchasers of residential property in England and Northern Ireland who acquire more than one dwelling in a single transaction or linked transactions. 

 

When will the measure come into effect?

This change will come into effect for transactions with an effective date on or after 1 June 2024. Transitional rules will apply such that MDR can still be claimed for contracts which are exchanged on or before 6 March 2024, regardless of when completion takes place.  This is subject to there being no variation of the contract after 6 March 2024.  For transactions which are linked and include the purchase of dwellings both before and after the change, those pre and post change transactions will be treated as unlinked for the purposes of MDR.

Our view

The abolition follows an external evaluation which, HMRC say, indicated that the relief did not play a significant part in supporting investment in housing. Our own experience is that there have been major investments in both private and affordable build to rent schemes where the relief has been material. The relief typically reduces the rate of SDLT from 5% to 3%, but notably in the context of student accommodation, can result in a rate as low as 1%.  Purchases of 6 or more dwellings or mixed property (meaning purchases which consist of both residential and non-residential property) will continue to qualify for the non-residential rates of SDLT of c.5%.