The Chancellor has officially announced the abolition of Multiple Dwelling Relief (MDR), stating it no longer serves its intended purpose.
MDR has been abolished for land transactions with an effective date falling on or after 1st June 2024.
However, MDR remains available for land transactions for which the contract relating to the transaction was entered into on or before 6th March 2024, regardless of when completion takes place. This is provided that the transaction is not an excluded transaction.
For those purchasers who have contracts which exchanged on or before 6th March 2024, they need to ensure they include this date (the date of exchange) on their return, in addition to the date of completion, otherwise the claim to MDR will be rejected. Ann-Marie Daly, Real Estate Solicitor at Primas Law said:
“Introduced in 2011, Multiple Dwelling Relief aimed to lower barriers to investment in residential property and promote private rented sector (PRS) housing supply.
MDR is a stamp duty tax relief applicable to both individuals and businesses. It offers a reduction in Stamp Duty Land Tax (SDLT) when buying two or more dwellings in a transaction. Under MDR, SDLT is calculated based on the average value of the dwellings acquired, rather than assessing each one separately.
The discontinuation of MDR was announced on the 6th March 2024 with the legislation coming into force on the 1st June 2024. This change will impact property owners and investors engaged in bulk property transactions, as each dwelling will now be subject to individual assessment.
For transactions where contracts were exchanged on or before the 6th March 2024, MDR may still apply, provided there is no alteration to the contract after that date, even if completion occurs after the 1st June 2024. If contracts are exchanged after 6th March 2024 and are substantially completed before the 1st June 2024, MDR might still be available.
While MDR has been abolished in the Spring Budget, there is no change to the existing rule for transactions involving the purchase of six or more residential properties. Transactions of this nature are not treated as residential properties and instead, the non-residential property SDLT rates will apply, however, this relief will still represent a loss of value in comparison to MDR.”
