Multiple Dwellings Relief and SDLT: What Changed and What's Left

What Multiple Dwellings Relief Used to Do

Before its abolition, Multiple Dwellings Relief allowed a buyer purchasing two or more dwellings in a single transaction, or in a series of linked transactions, to calculate Stamp Duty Land Tax based on the average price per dwelling rather than the total combined purchase price. Because SDLT is a progressive tax with increasing rates at higher price bands, averaging the price down across multiple units typically pushed the calculation into lower SDLT bands, producing a meaningfully lower total bill than taxing the full combined price as one purchase.

How the old calculation worked (illustrative, pre-abolition)

SDLT would then be calculated on the average price, multiplied by the number of dwellings, subject to a minimum effective rate — producing a substantially lower bill than taxing the full £600,000 or £800,000 as a single purchase at the higher bands those totals would otherwise trigger.

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Why It Was Abolished

Following a government review, HMRC concluded MDR was being claimed far more widely than originally intended — most notably where buyers or their advisers argued that a garden annexe, granny flat, or granny-annexe-style outbuilding constituted a separate "dwelling" purely to unlock the relief, even where the space wasn't genuinely a self-contained, independently habitable unit. The review found the relief had become a significant source of disputed and sometimes abusive claims, contributing to its removal for purchases completing from 1 June 2024.

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How SDLT Works Now on Multi-Unit Purchases

Without MDR, a buyer purchasing multiple dwellings in a single transaction (or linked transactions) has SDLT calculated on the full combined purchase price, using the standard residential SDLT bands — the same bands that would apply to any single residential purchase of that total value — plus the additional 5% surcharge if the purchase counts as an additional property purchase.

A £600,000 purchase of a house with an annexe, previously assessed under MDR at an averaged £300,000 per unit, is now simply taxed as a single £600,000 residential purchase using these bands on the full amount — a materially higher bill in most cases than the pre-abolition MDR calculation would have produced.

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Worked Comparison: Before and After Abolition

Example: purchasing a property with a self-contained annexe, combined price £600,000

The exact numerical difference varies by specific price and structure, but the abolition of MDR has generally increased SDLT liability meaningfully for buyers of annexed properties, small blocks of flats, and similar multi-unit purchases compared to the pre-2024 position.

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Transitional Protection: Who Still Benefits

A narrow transitional rule preserved MDR for buyers who had already exchanged contracts before the government's announcement date, even if completion happened after 1 June 2024, subject to specific conditions around the transaction not being varied afterwards. This transitional protection is now largely exhausted for new purchases, since it applied only to a specific historical window — anyone exchanging contracts today should assume MDR is simply unavailable, rather than checking for transitional eligibility.

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What Still Counts as a "Dwelling" — And Why It Barely Matters Now

Ironically, the technical question of whether an annexe or outbuilding is a genuinely self-contained "dwelling" (with its own facilities, independent access, and habitability) still matters for some other property tax purposes — council tax banding, for example — but is largely academic for SDLT now that MDR itself has been removed. Before 2024, this classification question was frequently contested precisely because MDR eligibility turned on it; today, since averaging relief no longer exists regardless of the answer, the practical SDLT stakes of that classification question have fallen away for most buyers.

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Practical Advice for Buyers of Multi-Unit Properties

1. Budget SDLT on the full combined purchase price, not an averaged per-unit figure, when making an offer on a property with an annexe or multiple units.
2. Don't rely on outdated online calculators or advice that still reference MDR as available — check current gov.uk guidance or a conveyancing solicitor for the applicable rules at the time of your specific purchase.
3. Consider genuinely separate transactions where structurally possible and commercially sensible (for example, negotiating truly independent purchases from different sellers) rather than assuming any multi-unit structuring can recreate MDR's old benefit — it generally cannot, post-abolition.
4. Factor the higher SDLT cost into overall purchase affordability for annexed or multi-dwelling properties, since this is now a materially larger upfront cost than it would have been before June 2024.