In this article, Nina Gohil, Trainee Solicitor, in the Sherrards Residential Real Estate department, highlights the upcoming changes to Multiple Dwellings Relief in respect of Stamp Duty Land Tax.
As part of The Sherrards Training Academy, we have asked our Legal Assistants and Trainee Solicitors to write articles to support their learning, and also to ensure they start to build on their own personal brand. This article has been fact-checked and proofread by Head of the Residential Real Estate department, Asha Ngai.
What is Stamp Duty Land Tax?
Stamp Duty Land Tax ("SDLT") is payable if you purchase a property over a certain price. The current SDLT threshold is over £250,000 for residential properties, meaning that if you purchase a property for less than £250,000 there is no SDLT to pay.
The amount of tax payable is dependent on the purchase price of the property, whether it is a residential or non-residential purchase, whether you are purchasing the property as an individual or as a company, whether you are non-UK resident and whether you own any additional property. The exact figure for SDLT payable on a purchase can be calculated on the government website, and can be found here.
What is Multiple Dwellings Relief?
You could be eligible for SDLT reliefs if you are buying your first home for example, or in a number of other specific scenarios. Such reliefs, if applicable, could reduce the amount of SDLT payable by you.
At the time of publication of this article, one of these SDLT reliefs is called Multiple Dwellings Relief ("MDR"). This relief can be claimed if you purchase more than one residential property in a single transaction. For instance, if you purchase a home based on large grounds, and there is an additional property on the grounds that you are also purchasing, you might be able to claim MDR. Therefore, a reduced SDLT rate will apply.
Changes to Multiple Dwellings Relief
The Government's spring budget, published on 6 March 2024, informed that from 1 June 2024, MDR will no longer continue to apply. This means that those who purchase a property after 1 June 2024 (which results in them owning more than one dwelling in a single transaction) will not be able to claim MDR.
However, for contracts exchanged on or before 6 March 2024, MDR will continue to apply, even where completion of the purchase takes place on or after 1 June 2024 provided there is no variation of the contract after 6 March 2024.
However, for contracts exchanged on or before 6 March 2024, MDR will continue to apply, even where completion of the purchase takes place on or after 1 June 2024 provided there is no variation of the contract after 6 March 2024.
If contracts are entered into after 6 March 2024, you can only benefit from MDR if actual completion takes place or the contract is 'substantially performed' (where the buyer has paid substantially all of the consideration specified in the contract), before 1 June 2024.
For more information regarding the changes to MDR, please follow this link to go to the Government's website.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
