Multiple Dwellings Relief (MDR) is one of a set of reliefs for Stamp Duty Land Tax (SDLT) on any purchase of property in England and Northern Ireland. There are similar rules for MDR in Scotland and Wales.
Under s 58D, sch 6B FA 2003 you can claim MDR relief when you buy more than one dwelling if a transaction (or a number of linked transactions) includes freehold or leasehold interests in more than one dwelling. For many landlords this will be where you are purchasing two or more properties.
How is Multiple Dwellings Relief Worked out?
Five houses were purchased for £2 million on 1st October 2023.
Individually the purchase price and SDLT is:
Using Multiple Dwellings Relief:
£2 million divided by 5 is £400,000
The SDLT payable on £400,000 is £19,500 (3% of £250,000 + 8% of £150,00).
£19,500 multiplied by 5 is £97,500.
This is more than 1% of £2 million, which is £20,000, and so £97,500 is the amount payable.
Making a claim using MDR would save SDLT of £7,000.
Note that in the above example, the SDLT higher rate of 3% applies as the transfer is of more than one residential property.
Buying Six or more dwellings?
Where a buyer acquires six or more dwellings in a “single transaction” they can elect to treat this as a non-residential transaction and apply the SDLT rates applying to non-residential transactions. This could be advantageous as the non-residential rates are more favorable:
|Residential property||Non-residential or mixed property|
|Band of consideration||Rate on that band %||Band of consideration||Rate on that band %|
|Up to £250,000||0||Up to £150,000||0|
|More than £250,000
up to £925,000
|5||More than £150,000
up to £250,000
|More than £925,000
up to £1.5m
|10||More than £250,000||5|
|More than £1.5m||12||
A single transaction means a single contract as opposed to a single land transaction. The fact that completion takes place at different times for different properties under a single contract does not affect the analysis. Therefore, the acquisition of six or more flats under one contract with completion at different times as the flats come on stream is a single transaction. (It is advisable for a buyer to calculate the SDLT on the basis of multiple dwellings relief and the non-residential rates to see which gives the better result.)
Where both residential and non-residential properties are acquired, it is necessary to apportion the consideration between the two types of property and then calculate multiple dwellings relief on the residential transactions.
If a buyer acquires non-residential land and residential land in a single transaction and claims multiple dwellings relief in respect of any dwellings, the 3% higher rate charge applies if the non-residential element is negligible or artificially contrived.
Multiple dwellings relief is not available where:
– the flat 15% higher rate applies to acquisitions of interests in dwellings;
– the Property Authorised Investment Funds and Co-Ownership Authorised Contractual Schemes seeding relief provisions apply; or
– group relief, reconstruction relief, acquisition relief, or charities relief is claimed.
The three-year rule
Where a claim for MDR is made and the number of dwellings is reduced (by sale, amalgamation etc) in the three years following the purchase then the relief must be recalculated. If more SDLT is payable, then a further return must be lodged and the further SDLT paid within 14 days of the date the number of dwellings was reduced (30 days for transactions with an effective date prior to 1 March 2019).
MDR only applies if a claim is made when lodging the relevant SDLT return or by amending the return within one year of its lodgement. Claims outside this period will not be accepted by HMRC and there is no obligation on HMRC to advise the taxpayer that they may be entitled to this relief. Secure Service Ltd  (TC07555), Smith Homes  (TC07914)
Annexes and Multiple Dwellings Relief
Multiple dwellings relief has been unsuccessfully claimed in a number of cases involving residential properties with annexes. While the annexes were sufficient to accommodate the basic domestic living needs of occupants, they were found to lack certain necessary features, including insufficient privacy and security (no lockable doors); no kitchen facilities or no proper eating area (a utility room in which meals could be eaten contained a toilet and no space for seating); accessible only with close proximity to the main house; and, no separate heating and hot water controls. Fiander and Brower v HMRC (2021), Wilkinson  (TC08059), Mason  (TC08216)
However, it is possible to claim MDR for annexes if the annex meets the specific requirements as outlined by HMRC and we have experience in making successful claims. If you are in the process of purchasing a property with an annex please kindly contact us as soon as possible to establish whether or not an MDR claim can be made to reduce the amount of SDLT payable on the purchase of the property.
Land and non-residential buildings
MDR does not apply to the acquisition of bare land or a non-residential building with planning permission – there needs to be some physical manifestation of a dwelling or a building being built or adapted for use as a dwelling (but it is a question of fact and degree as to what precise physical manifestation will meet the statutory test). Ladson Preston v HMRC .
If you have any further queries on this subject please reach out to us at 01902 711370 or email firstname.lastname@example.org if you have any questions or require our expert assistance.