Multiple Dwellings Relief

  • Posted: 14th May 2019
  • Author: Kirsty McMullan
  • Link: Permalink

Multiple Dwellings Relief (MDR) is a form of tax relief brought in during the 2011 budget. Its initial aim was to encourage the growth of investment purchasers and since then it’s becoming more common in also everyday residential transactions.

MDR allows for stamp duty to be paid on the average accumulative total of the transaction rather on each individual purchase – meaning clients may be able to save quite a lot of money.

For example:-

Husband and wife purchase two properties as part of their buy-to-let portfolio from the same seller.

  • Husband’s property is being purchased for £125,000.00
  • Wife’s property is being purchased for £125,000.00
  • Total value of the property transaction = £250,000.00

As both purchasers are automatically applicable for higher rate stamp duty (3%), SDLT for each property would normally be £3,750.00 each. Therefore meaning the total SDLT payable on each property would be £7,500.00.

Nevertheless as this would be classed as a linked transaction where husband and wife are linked, it is the same seller and also completion was on the same day, applying MDR is applicable in these circumstances.

As the minimum percentage payable under the MDR rules is 1%, the MDR rules in this circumstance would mean that the total amount of SDLT payable would be £2,500.00.

Total saving:- £5,000.00.

Nevertheless, MDR does not just apply to investment purchasers. If you have recently purchased a Property with a Granny Annex or agricultural land accompanying it then you may also be entitled to claim the relief as outlined below:-

Husband and wife purchase a property with a Granny Annex accompanied to it.

Purchase price of the total property plus the granny annexe was £910,000.00

Stamp Duty paid on completion = £35,500.00

Since completion the Granny Annex is now separately rated by the Council.

Applying MDR would calculate as follows:-

£910,000.00 divided by 2 dwellings = £455,000.00 per property

SDLT payable per property price of £455,000.00 = £12,750.00

£12,750.00 x 2 (per property) = £25,500.00

Total savings:- £10,000.00.

Although it is important to note that there is a three year time limit from the date of completion on implementing this relief.

If you believe that you fit into these criteria and you can claim MDR then please do not hesitate to contact us.

This article was written by Kirsty McMullan. If you would like further information on the issues raised contact Kirsty to discuss in more detail.

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