End of multiple dwellings relief for sdlt
The stamp duty land tax (SDLT) landscape has shifted significantly, and if you’re involved in property transactions, it’s crucial to understand the changes. From April 2024, the multiple dwellings relief (MDR) has been withdrawn by HMRC, marking an important moment for property developers, investors and those purchasing several residential properties at once. This change affects how much SDLT you’ll pay, and without proper planning, your tax bill could be substantially higher than you might expect.
What was multiple dwellings relief?
Multiple dwellings relief was a valuable exemption that reduced your SDLT liability when you purchased two or more dwellings in a single transaction. Rather than calculating stamp duty on each property individually, the relief allowed you to spread the transaction value across the properties, often resulting in significant savings—sometimes running into tens of thousands of pounds.
For example, if a property developer purchased five residential units for £2 million total, they could claim MDR, which effectively reduced the SDLT rate applied. Without this relief, each property would be treated separately, pushing more of the transaction value into higher SDLT bands.
The withdrawal of multiple dwellings relief
HMRC announced the end of MDR as part of its wider fiscal policy changes. From 1 April 2024, this relief is no longer available for new transactions. This was a significant change and one that many in the property industry weren’t immediately prepared for.
The withdrawal applies to all SDLT transactions completed on or after that date, regardless of whether contracts were exchanged beforehand. HMRC has been clear: if your completion date falls on or after 1 April 2024, MDR cannot be claimed.
This removal has immediate, material consequences. Developers and property investors now face higher SDLT bills on bulk purchases of residential properties. For larger portfolios or development projects, this can represent a considerable additional cost that needs factoring into project margins and investment returns.
How does this affect your SDLT calculations now?
Without MDR, each property in a transaction is now treated separately for SDLT purposes. This means SDLT rates and thresholds are applied individually to each dwelling, rather than to the aggregate purchase price.
Current SDLT rates for residential properties in the 2024/25 tax year remain:
- 0% on the first £250,000
- 5% on £250,001 to £925,000
- 10% on £925,001 to £1.5 million
- 15% on amounts over £1.5 million
Additionally, if you already own a residential property and purchase another, the surcharge of 5% applies to all bands (effectively adding 5% to each threshold rate above). Higher rates also apply to non-resident purchases.
By treating each property separately, you lose the ability to pool values across multiple purchases in a single transaction. This fundamentally changes the economics of bulk property acquisitions.
Planning ahead: what you should do
If you’re planning property purchases or development projects, it’s essential to review your transaction structure and timeline. Several considerations apply:
Completion dates matter. If you haven’t yet completed on a transaction, ensure you understand the precise implications of a post-1 April 2024 completion. Even slight delays can trigger significantly higher tax bills.
Consider your purchase structure. Depending on your circumstances, it may be worth exploring whether purchasing properties individually or through separate legal entities could be more tax-efficient, though this requires careful analysis and professional advice.
Budget for higher SDLT. Projects that previously benefited from MDR will now face higher upfront costs. Ensure your financial forecasts and project appraisals account for this additional liability.
Review mixed-use transactions. If some properties in your transaction are non-residential, the position may differ. Professional advice is particularly important here.
What next?
The removal of MDR represents a genuine shift in SDLT planning. Whilst it simplifies HMRC’s administration, it materially increases costs for those purchasing multiple residential properties. This isn’t simply an academic tax change—it affects the bottom line of development projects, investment portfolios and purchase decisions.
If you’re currently involved in property transactions or considering acquisitions, now is the time to seek clarity on how this affects your specific circumstances. Every transaction is different, and there may be legitimate planning opportunities available to you depending on your situation.
For tailored advice, contact Severn Accounting — we’re here to help.