Stamp Duty Land Tax (SDLT) Exemptions and Relief on Multiple Dwellings

28th August 2018

Some types of transactions may be exempt from SDLT or reliefs can be applicable to reduce the amount payable.

One of the exemptions available is multiple dwellings relief and can apply if two or more properties are being acquired.

Relief for multiple and linked transactions:

The relief applies where there is a linked transaction or a number of linked transactions to include freehold or leasehold interests in more than one dwelling.

For example, if two houses are bought for £300,000 each and two others for £400,000 each, then the total consideration is £1.4 million.

The SDLT is calculated by dividing the total consideration by the number of transactions (£1.4 million ÷ 4 = £350,000). Then SDLT is calculated against that average price and then multiplied by the number of dwellings.

It is also worth noting that the additional 3% is charged on the whole of each of the average prices. Very broadly this applies when buying a second or subsequent dwelling.

This relief does not apply to the transfer of a freehold reversion or headlease where a dwelling has a long lease of 21 years or more.

Furthermore, there is an important qualification to this relief.  In the event that the purchaser sells the dwelling to an unconnected person within three years from the effected date of purchase the relief claimed will be clawed back.

Six-or-more rule:

SDLT rates are lower for commercial properties and agricultural land which fall into the non-residential definition or a mixed residential/non-residential development.

If six or more separate dwellings are being purchased then the whole transaction is treated as being non-residential.

This relief is particularly beneficial to residential investors and developer convertors who wish to carry out a single transaction involving a block of flats.  In this instance, it is often better not to claim multiple dwellings relief and take advantage of the six-or more rule instead.

For the six-or-more relief to apply there must be a single chargeable transaction thus it is not enough that the linked transactions make up the six. The best way to approach this is to have one contract under which legal completion of all the properties takes place simultaneously.

There is also relief available for:

  • transferring property between companies in the same group
  • charities
  • registered social landlords
  • buying property through a collective claim under the enfranchisement legislation
Simon Tennant

Nazli Kartal