SDLTM29905 - Relief for transfers multiple dwellings: Overview

MDR has been abolished for transactions which complete, or which substantially perform (see SDLTM07850), on or after 1 June 2024, subject to special transitional rules (see SDLTM29902+.).

Special transitional rules relating to linked transactions, can be found at SDLTM29903

Where the relief is claimed, the rate of SDLT which applies to the consideration attributable to interests in dwellings is determined by reference to the amount of this consideration, divided by the number of dwellings (i.e. the mean consideration attributable to the dwellings). This is subject to a minimum rate of 1%.

It is the purchaser's choice whether to claim the relief. It will not apply automatically if not claimed. In some circumstances a purchaser may choose to apply FA03 S116(7) whereby the purchase of six or more dwellings in a single transaction may be treated as a non residential transaction for the purposes of SDLT. If both options are available, the purchaser is free to choose whichever route is more SDLT efficient.

The rate of SDLT which applies to the consideration attributable to interests in land other than dwellings (if any) is the rate which would apply in the absence of the relief.

Superior freehold or leasehold interests in dwellings subject to leases granted for an initial period of 21 years or more are not eligible for relief except in certain shared ownership cases - see SCH6B PARA 2(7)

The relief includes provision for “off-plan” purchases where construction or adaptation of the property for residential use may not have commenced by the effective date of the transaction.

HMRC consider "off-plan" to mean a purchase where the subject - matter of the contract is a dwelling that is to constructed but construction has not started at the point the contract is substantially performed. This is distinct from an acquistion of bare land with planning permission but without an obligation to build a dwelling. MDR will apply to the former but not the latter.

The relief also provides for the tax calculation to be adjusted if the number of dwellings involved is reduced within three years of the effective date of the transaction.

Interaction with the higher rates of SDLT applicable to purchases of additional residential properties.

A purchase of multiple dwellings which qualifies for the higher rates will still be eligible for multiple dwelling relief, albeit the rate of tax on the average consideration will take into account the higher rates.

Interaction with the non-resident rates of SDLT applicable to purchases by non-UK residents.

A purchase of multiple dwellings which are subject to the higher rates payable by non-UK resident purchasers will also be eligible for multiple dwellings relief. Again, the rate of tax on the average consideration will take into account the non-resident rates and if applicable, the rates payable to purchases of additional residential properties.