Abolition of Multiple Dwellings Relief following the Spring Budget 2024

The Chancellor announced that the Stamp Duty Land Tax (SDLT) Relief for Multiple Dwellings will be abolished from 1 June 2024 on purchases of residential properties in England and Northern Ireland.

Multiple Dwellings Relief (MDR) is applied to a purchase of two or more dwellings in one single transaction, or dwellings purchased by a purchaser in a series of linked transactions. The key element to the application of MDR is the question of whether the purchases are all dependent upon one another i.e. would a purchaser continue with the transaction if they could only purchase one of the dwellings? The relief was calculated by reference to the average chargeable consideration per dwelling, allowing a purchaser to benefit from the lower SDLT rate bands on a per-property basis.

The application of MDR can lead to substantial savings if the properties purchased are deemed suitable for the relief. This could be a property with a granny annexe or other dwelling within the grounds – provided they are wholly self-contained with no access to the main dwelling required, or a series of linked purchases.

MDR was originally introduced by the Government in 2011 to encourage investment in the private rental sector; however, it has been advised that there was a lack of evidence that MDR had any effect on investments and was open to “incorrect and abusive claims” as evidenced by many cases being referred to the tax tribunal.

Ongoing transactions

If you have already exchanged contracts prior to the Spring Budget (6^th March 2024) MDR will still be applied to your purchase, irrespective of when completion takes place.

If you have not exchanged contracts, there is still an opportunity to apply MDR if exchange and completion takes place before 1^st June 2024.

How will this effect the property market?

For the individual property purchaser who may have been unaware of MDR until advice had been taken, it is likely to have little impact on their decision to purchase a particular property. However, for large-scale property investors the withdrawal of MDR will have a large impact on transaction costs, which will reduce profitability and potentially their ability to proceed with large scale purchases.

This will undoubtedly have an effect on the market for sellers of property as well as purchasers, who actually pay the tax, as a purchaser will be factoring in the additional costs of the purchase, which could lead to more price negotiations taking place and therefore less profitability for the seller.

Other available relief

Purchasers of six or more dwellings will still be able to claim the non-residential rates, which will reduce their liability to Stamp Duty Land Tax, although not as significantly as if MDR were still available.