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How is Stamp Duty Land Tax Affected by the Abolition of Multiple Dwellings Relief?

In March, the Chancellor announced that Multiple Dwellings Relief (MDR) from Stamp Duty Land Tax (SDLT) on purchases of residential property in England and Northern Ireland would be abolished on 1st June 2024.

In this article, Real Estate Associate Izabela Treacy explains the purpose of Multiple Dwellings Relief, why it’s been abolished, and the effect this will have on landlords in Northern Ireland. 

Why Has MDR on Residential Stamp Duty Land Tax Been Abolished Now?

MDR gave buyers a reduced rate of SDLT when they ‘bulk’ purchased more than one residential property (or dwelling). It was introduced in 2011 to make investment into the residential property market easier, and to promote private rental housing supply. In 2021, HMRC opened a consultation to reform MDR, to reduce the occurrence of inappropriate use of the relief, and to make the process fairer. 

The relief was examined again in February 2023 as part of HMRC’s Tax Reliefs Evaluation Programme. This evaluation found that it did not significantly contribute to increased investment, had minimal positive impact, and was not cost-effective in reaching its aims. 

The reforms have now been abandoned, and the relief was abolished on 1st June 2024. 

How Does the Abolition of MDR for Stamp Duty Land Tax Impact Landlords?

The abolition of MDR means that all landlords purchasing more than one residential dwelling will no longer be eligible for tax relief. However, the material impact largely depends on the individual landlord and their investment strategy. 

Commercial Investors or Developers

Investors or developers building a portfolio who have used the relief to cut costs or increase profitability will experience a significant impact due to the loss of savings previously enjoyed on residential SDLT. 

However, SDLT for commercial property is significantly lower than residential SDLT, and there are certain instances in which the commercial rate of SDLT applies to residential property. 

These include: 

  • Where there are six or more residential dwellings in a purchase and
  • Where there is a mix of residential and commercial use property in a purchase.  

In these circumstances, large-scale investors could benefit from the more favourable rate of SDLT, but any purchases of two to five residential-only dwellings may incur significant SDLT compared to the amount payable under MDR.  

Individual Private Landlords 

Individual private landlords who purchase residential property to let one at a time won’t be affected unless they purchase land or a building holding more than one dwelling (such as a house converted into self-contained flats). In these cases, the MDR they would have previously been entitled to will no longer be available.  

Is MDR on Stamp Duty Land Tax Still Available for Contracts in Progress?

MDR will still apply to existing contracts entered into before 6th March 2024, providing there are no changes to the contract after this date, even if they complete after the withdrawal date of 1st June.  

Contracts entered into after 6th March will still be able to benefit from MDR if it completes or is substantially performed before 1st June 2024. 

Substantial performance occurs when either 90% of the purchase price is paid, or the purchaser takes possession of the land before completion. 

Residential SDLT: How Will the End of MDR Affect the Property Market?

The long-term impact abolishing MDR will have on the wider property market remains to be seen. However, the inability to save tax on bulk residential property purchases of two to five dwellings will no doubt affect affordability for mid-sized developers trying to build a portfolio. 

The ability for large investors to claim commercial SDLT for six or more residential purchases means the abolition of MDR may not significantly impact their activity in the property market. 

The same may be said for landlords buying residential property to let one at a time, as unless they’re purchasing land or a building with more than one dwelling, MDR wouldn’t apply in any case. 

Talk to Us 

The abolition of MDR may be an unexpected change for many landlords purchasing residential property. If you’re concerned your Stamp Duty rate for an existing or upcoming purchase of residential dwellings will be affected by this update, contact our Real Estate team on 02890 323864 |  make an email enquiry here.


Do you Pay Stamp Duty on HMO? 

Stamp Duty Land Tax (SDLT) is payable on Houses in Multiple Occupation (HMO), however, the type and rate of SDLT depends on the structure of the HMO and whether the spaces occupied meet the requirements to qualify as a single dwelling. 

What is the 3% Surcharge for Multiple Dwellings Relief? 

The 3% surcharge is an additional rate of Stamp duty Land Tax payable by existing homeowners on purchases of additional residential property not bought to replace a current home. This surcharge is payable even where Multiple Dwelling Relief applies (MDR) unless the purchase contains mixed-use properties such as a shop with a flat above. 

MDR now only applies to contracts entered into before 6th March 2024, and to contracts after this date that are completed, or substantially performed before MDR is abolished on 1st June 2024.   

Do I Qualify for Multiple Dwellings Relief? 

Multiple Dwelling Relief (MDR) will be abolished on 1st June 2024. Therefore, to qualify for MDR, you will have to have an existing contract to purchase multiple dwellings that was either entered into before 6th March 2024 and remains unchanged, or a contract entered into after this date that will be complete or substantially performed before 1st June 2024. 

There are additional rules regarding what constitutes a residential dwelling for the purposes of MDR. The dwelling must either be used or suitable for use as a single dwelling or is being constructed or adapted for such use. 

What is the Granny Annexe Loophole? 

The granny annexe loophole refers to tax reliefs on Stamp Duty Land Tax (SDLT) for purchases of two or more residential dwellings bought at the same time or as part of linked transactions between the same parties. 

Multiple Dwellings Relief (MDR) will now be abolished from 1st June 2024, therefore contracts that are entered into after the 6th of March 2024 but not completed before this date will not be able to claim MDR relief. 

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