SDLTM29981 - Reliefs for transfers involving multiple dwellings: Example 7

A purchaser agrees to purchase the freehold of an uncompleted block of six flats for £1.2 million. The consideration is paid prior to completion. Six months later, the contract is varied to provide for construction of four larger flats instead. The consideration is unchanged.

The purchase was a relevant transaction as it involved the acquisition of more than one dwelling - i.e. the six flats. The contract was substantially performed when the full consideration was paid. The rate of tax was set by the total consideration given, divided by the number of dwellings. The higher rate for additional dwellings will be applicable. More information about the higher rate can be found at SDLTM09730. The non-resident rates of SDLT may also be applicable if any purchaser is not UK resident. More information about the non-resident rates can be found at SDLTM09860.

The variation of the contract is deemed to have taken place immediately prior to substantial performance. The amount of tax is now set by the consideration divided by the revised number of dwellings.

As the amount of tax has increased, the purchaser is required to make a further return within 30 days of the contract variation and pay the additional tax due.

If however the number of flats had been increased, this change would be ignored for the purposes of SDLT.