Was Multiple Dwellings Relief (MDR) abolished and what replaced it?

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Multiple Dwellings Relief (MDR) was an Stamp Duty Land Tax (SDLT) relief that allowed purchasers buying two or more residential dwellings in a single transaction to calculate SDLT on the average price per dwelling rather than the total price, significantly reducing the tax bill on bulk purchases of residential property. Abolition HMRC abolished MDR with effect from 1 June 2024 (Finance Act 2024, announced at Spring Budget on 6 March 2024). The relief no longer applies to SDLT transactions where contracts were exchanged on or after 6 March 2024, unless completion occurred before 1 June 2024 under a contract exchanged before 6 March 2024. Why was it abolished? HMRC concluded (following a consultation in 2021) that MDR was being widely used in ways that went beyond its policy intent -- in particular, many claims involved the annexe exception being stretched to cover properties that were arguably not separate dwellings. Abuse was estimated to be costing significant tax revenue. What replaced MDR? There is no direct like-for-like replacement. However: -- Mixed-use SDLT: where a single transaction genuinely includes both residential and non-residential (commercial) property, the non-residential SDLT rates apply to the whole transaction (maximum 5% compared to the 12% residential top rate plus 3% additional-rate surcharge). This can produce significant savings but requires the property to be genuinely mixed-use. -- SDLT sub-sale arrangements: legitimate structures involving sub-sales may be available in some commercial contexts but are complex and subject to anti-avoidance rules. Transitional provisions For contracts exchanged before 6 March 2024, MDR continues to apply even if completion was after 1 June 2024, provided no variation to the contract was made on or after 6 March 2024. This means some purchasers who exchanged early in 2024 may still benefit. Impact on buy-to-let investors and portfolio purchases Investors buying multiple properties in a single transaction (common in portfolio acquisitions) are most affected. The additional SDLT cost of abolishing MDR can run to tens of thousands of pounds on a portfolio of flats, making some transactions unviable.

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