SDLTM29930 - Relief for transfers involving multiple dwellings: Superior interests FA03/SCH6B/PARA2(6)

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

For the purpose of determining whether a transaction is a relevant transaction, a superior interest (freehold or headlease) over property which includes dwellings is treated as if it were an interest in those dwellings.

Example: a purchaser acquires the freehold of a new block of four flats which are untenanted. The transaction is a relevant transaction.

However, such a superior interest cannot be taken into account for this purpose to the extent that it is a superior interest in relation to a lease over a dwelling which was granted for an initial term of more than 21 years.

Example: a purchaser acquires the freehold of a block of four flats. The transaction is not linked with any other transaction.

• Where two of the four flats are tenanted under long leases, the transaction is a relevant transaction, the main subject-matter of which includes two dwellings, i.e. the two flats not tenanted under long leases.
• If three of the four flats are tenanted under long leases, the transaction is not a relevant transaction, because only one flat can be taken into account, i.e. that which is not tenanted.

However, for transactions with an effective date on or after 26 March 2015, where the chargeable interest acquired is a leasehold interest acquired from a qualifying body (see FA03 SCH9 PARA5) under a lease and leaseback arrangement for shared ownership properties falling within FA03 S57A, PARA 2(6) is disapplied. The effect of that disapplication is that multiple dwellings relief will be available for these arrangements if the other conditions are satisfied.