Upcoming changes to Stamp Duty Land Tax

As of June 1, 2024, the changes announced in March’s Spring Budget, for Multiple Dwellings Relief (MDR) will be actioned. Stamp Duty Land Tax (SDLT) Relief for MDR is set to be abolished, affecting residential property purchases in England and Northern Ireland.

What is MDR?

MDR was introduced in 2011 to stimulate investment in the private rental sector. It allowed owners to benefit from tax relief applied to purchases of two or more dwellings in a single or linked transaction.

The key consideration for MDR eligibility lies in whether the purchases are interdependent. The relief was previously calculated based on the average chargeable consideration per dwelling, allowing buyers to benefit from lower SDLT rate bands on a per-property basis.

Eligible properties, such as those with granny annexes or fully self-contained separate dwellings within the grounds, had the potential to benefit from significant savings under MDR.

Why is it being abolished?

Multiple Dwellings Relief is being abolished due to false claimants abusing the relief, leading to scrutiny and numerous cases referred to tax tribunals.

Impact on Ongoing Transactions

  • Ongoing transactions exchanged before the Spring Budget (March 6, 2024) will still benefit from MDR – regardless of the completion date.
  • Transactions yet to exchange, MDR can still be utilised if exchange and completion occur before June 1, 2024.

Effects on the Property Market

The removal of MDR is set to have varying effects on the property market. While individual purchasers may be relatively unaffected, large-scale property investors will likely experience an increase in transaction costs. This could impact profitability and the feasibility of large-scale purchases.

This shift is expected to influence property sellers and buyers, as purchasers factor in the additional costs of the acquisition. Which could lead to increased price negotiations and reduced profitability for sellers.

Non-Residential Rates

Despite the removal of MDR, purchasers of six or more dwellings will still be eligible to claim non-residential rates, albeit with reduced savings.

Below we have included two informative links that share further information about the upcoming changes. If you have any questions on the matter, please feel free to get in touch!

Stamp Duty Land Tax: Abolition of Multiple Dwellings Relief from 1 June 2024 – GOV.UK (www.gov.uk)

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