Buying property is expensive, but sometimes small savings can be made particularly where Stamp Duty Land Tax (“SDLT”) reliefs can be applied. One such relief is Multiple Dwellings Relief (“MDR”). This can present itself as both a saving for a buyer, and also something to aid a seller when marketing a property for sale. This is also a key space to watch as new higher rates of tax are introduced.
Multiple Dwellings Relief can be a great asset to those who qualify because of the effect it has in reducing the Stamp Duty Land Tax (“SDLT”) liability to be paid by a purchaser. The calculation is complicated, but it works, simply put, by dividing the overall purchase price by the number of dwellings to give an average purchase price. The SDLT is then calculated on the average purchase price and then multiplied by the number of dwellings.
What constitutes a dwelling is not straightforward, but firstly the property must be “suitable for use” as a single dwelling.
“Suitable for use” implies a fitness for purpose as a dwelling. The property must be capable of meeting the most basic domestic living needs. Somewhere to sleep, somewhere to observe the demands of everyday hygiene, somewhere to cook.
In brief, the relief, if available, produces a liability for each dwelling the aggregate of which is often less than the SDLT charge would have been based on the overall purchase price. However, knowing when a property transaction will qualify can be difficult to determine. This is a question of context, of fact, and of technical legal provisions. If in doubt, or if anything less than absolutely convinced and in receipt of professional advice, it is vital to take proper advice.
If you are looking to purchase property and claim multiple dwellings relief, it can pay to instruct the right experts for the transaction itself and for the right advice! Similarly, check if the property can qualify for MDR, as this might be worth shouting about!