What does scrapping Multiple Dwelling Relief mean for investors?

A real estate solicitor at Primas Law has given a detailed overview of what the abolition of Multiple Dwellings Relief means for both individuals and businesses.

Previously, a relief was available to those buying two or more properties in a single transaction. Now, to be able to make any kind of saving, six or more purchases would be required either for an individual or buying group.

Ann-Marie Daly from Primas says: “Introduced in 2011, Multiple Dwelling Relief aimed to lower barriers to investment in residential property and promote the 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 6 March 2024 with the legislation coming into force on 1 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 6 March 2024, MDR may still apply, provided there is no alteration to the contract after that date, even if completion occurs after 1 June 2024. If contracts are exchanged after 6th March 2024 and are substantially completed before 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.”