Hayley Blackett, Conveyancing Team Leader at OCG Legal, takes a look at the implications of MDR abolishment

Multiple Dwellings Relief Abolished – Budget 2024

What is Multiple Dwellings Relief (MDR)?

MDR applies to the purchase of two or more dwellings in a single transaction or dwellings acquired through a series of linked transactions. Under MDR, you can apply the Stamp Duty Land Tax (SDLT) rate to the average value of the collective properties rather than the total purchase price, provided that the main dwelling constitutes two-thirds or more of the total value. This relief could lead to significant savings for those who qualify.

Already exchanged contracts on your purchase but have not yet completed? Can you still use MDR if you qualify?

If you’ve already exchanged contracts, the government has confirmed that property transactions with contracts exchanged ‘on or before 6 March 2024’ will continue to benefit from MDR, regardless of when they complete.

Haven’t yet exchanged on your purchase? Can you still use MDR if you qualify?

Purchases eligible for MDR will still benefit from the relief if they exchange and complete prior to 1 June 2024.

Important Note:

• 1st June 2024 falls on a Saturday, making the last eligible day for completion Friday, 31st May 2024.

Why is MDR being abolished, and did we see this coming?

The government’s decision to abolish MDR is supported by evidence that it was promoting investment in the private rental sector, as intended, but had minimal positive impact on the overall housing supply. Additionally, there has been a rise in ‘incorrect and abusive claims’, leading to numerous MDR cases reaching the tax tribunal in recent years.

In February 2022, HM Revenue & Customs (HMRC) released a consultation aimed at improving the operation of SDLT, ensuring fairer outcomes, and reducing the scope for incorrect claims and abuse of rules related to mixed property transactions and MDR. This consultation highlighted the need for change. This suggested that changes were coming to the way that reliefs worked, but the Autumn Budget 2023 was silent on MDR and mixed use SDLT reliefs.

What does this mean for the property market?

The government’s evaluation report highlights contrasting perspectives on the impact of MDR and notes that most private individuals (61%) said that the availability of MDR had no influence over their decision to buy multiple dwellings whereas for businesses, 60% said that the availability of the relief had at least some influence on their decision to purchase dwellings.

Most people in the property sector will tell you that MDR had been a significant factor for purchasers, particularly so for developers and investors .

If you require any further information regarding this topic, please contact OCG Legal on enquiries@ocglegal.co.uk