Stamp Duty Land Tax (SDLT) and Multiple Dwelling Relief

What is Multiple Dwelling Relief (MDR)

Within the SLDT legislation there is a relief known as Multiple Dwelling relief.  When buying more than one dwelling at the same time (or under linked transaction rules) the use of MDR can make some significant savings for the buyer.

On 06 March 2024, in the Spring Budget, the Chancellor announced that MDR will be abolished from 01 June 2024. This decision may potentially lead to an increase in landlords buying up more than one property at a time. However, the broader impact on the overall housing market remains unknown.

The relief is useful but like all reliefs, is often abused and filling the Tribunals with spurious debates as to whether a detached garage with a toilet in it is a dwelling or that farmhouse with a stable having a small kitchenette (i.e., kettle and microwave).

How does MDR work

It works by allowing you to calculate SDLT based on the average of all the properties purchased rather than their collective value.  For example, you buy 2 dwellings each at £250,000 and assuming 3% surcharge applies as these are not main residences. 

MDR Examples with and without relief:

The calculation would look like this (£500,000 combined purchase value) :

But with MDR, we calculate the SDLT based on each property individually :-

Number of Properties   = 2

Thus a saving of £12,500 is made by using MDR.  This is a very basic calculation and meant only as an example, there are other factors that could apply and so should not be taken as advice.

I think the removal of MDR is probably not a bad idea.  SDLT legislation is already overly complex and often confusing and that opens the opportunity up for abuse and also genuine confusion for taxpayers.  The MDR itself has been increasingly featuring in tribunals which takes up time and resources and taxes should be simple or at least clear and logical but with MDR, there is just so many ways to define what a dwelling is that it makes the VAT zero rating of a sausage roll look easy in comparison.

As MDR probably only affects those who can afford to buy more than one dwelling at a time, it is unlikely that there will be anyone lamenting its loss, other than those who could afford to buy multiple dwellings at a time.  Whether this will have longer term affects on the property market, I guess only time will tell.

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