Multiple Dwellings Relief to be abolished from 1 June 2024 – your key questions answered

It has been announced by the government in the 2024 Spring Budget that Stamp Duty Land Tax (‘SDLT’) Multiple Dwellings Relief (‘MDR’) will be abolished from 1 June 2024.

In this article we discuss this sudden change to the rules and what it might mean for buyers and sellers.

What is Multiple Dwellings Relief (‘MDR’)?

MDR can apply to the purchase of two or more dwellings in one single transaction, or dwellings purchased in a series of linked transactions. MDR allows you to calculate the average value of the collective properties and applies the SDLT rates to this figure, rather than the total purchase price (provided that the main dwelling must be 2/3 or more of the total value).

This can lead to significant savings for those who qualify for the relief, such as those purchasing a house with a granny annexe or other subsidiary dwelling, or for those purchasing several dwellings at the same time.

I have already exchanged on my purchase but have not yet completed, can I still use MDR if I qualify?  

For those who have already exchanged contracts, the government has confirmed that property transactions with contracts that were exchanged ‘on or before 6 March 2024’ will continue to benefit from the relief regardless of when they complete. 

I have not yet exchanged on my purchase, can I still use MDR if I qualify?

There is still a window of opportunity, purchases eligible for MDR will still benefit from the relief if they exchange and complete prior to 1 June 2024. Please consult with your solicitor who can advise you.

We would highlight that 1 June 2024 falls on a Saturday, so the last eligible day for completion will be Friday 31 May 2024. The Spring Bank Holiday falls on Monday 27 May 2024, making this a 4 day working week.

Why is the government scrapping MDR and did we see this coming?

The government’s justification behind this is the lack of evidence that MDR was promoting investment in the private rented sector as it was designed to, and therefore had minimal positive impact on the overall housing supply. The government has also said it had seen a rise in ‘incorrect and abusive claims’, which is supported by the many MDR cases going to the tax tribunal in the last few years. 

HMRC released a consultation which concluded in February 2022 on measures to improve the operation of SDLT to ensure fairer outcomes and reduce the scope for incorrect claims and abuse of the rules for mixed property transactions and MDR.  This suggested that changes were coming to the way that reliefs worked, but the Autumn Budget 2023 was silent on MDR and mixed use SDLT reliefs.

What does this mean for the property market?

The governments evaluation report notes that most private individuals (61%) said that the availability of MDR had no influence over their decision to buy multiple dwellings whereas for businesses, 60% said that the availability of the relief had at least some influence on their decision to purchase dwellings.

However, many in the property sector will tell you that MDR has been a significant factor for purchasers, particularly so for developers and investors (although it is noted that those purchasing 6 or more dwellings may still be eligible to pay the lower non-residential rates of SDLT).

It will be interesting to see in the coming months what impact this will have on the property market and whether this will lead to an increase in purchasers trying to complete deals prior to the June 2024 deadline.

Will the government be making any other changes to SDLT or any other SDLT reliefs, such as mixed use?

It was announced in the Budget that there will be no changes to stamp duty land tax.

The government has not made any comments in the Budget regarding mixed use claims.

For our agricultural clients, the government has advised that they will be engaging with the agricultural industry to determine if there are any particular impacts for the sector that should be considered further.

Will I qualify for any other SDLT reliefs?

Please get in touch with your solicitor who will be able to advise you.

How Moore Barlow can help you

If you require further legal advise on this subject, please contact the Moore Barlow team today.