Stamp Duty changes for multiple dwellings

News  |   13 March 2012

Is there Stamp Duty relief available if I buy more than one property from the same seller?

Yes, this is correct, but please note Stamp Duty land Tax (SDLT) has now replaced Stamp Duty. The Finance Bill 2011 introduced the Relief for Multiple Dwellings which came into force on 19th July 2011. Purchasers of residential property who acquire more than one dwelling from the same seller (including in either case, persons who are connected with them) will benefit from this new relief. The aim of the relief is to stimulate the property market generally and to reduce the barrier to investment in residential property.

Previously, on multiple acquisitions of properties, SDLT was payable on the combined values of the properties purchased. For example, someone buying three flats in a development each worth £220,000 would have paid 4% SDLT on the total price of £660,000, being the percentage that applies to properties valued between £500,000 and £1million. The SDLT payable would have been £26,400 rather than the 1% rate applied to valuations for individual properties in the £125,000 to £250,000 band.

Now that the Government has relaxed the rules, the rate of SDLT on the combined value of the properties purchased is determined by the average value of the properties. i.e. the total value of the properties divided by the number purchased, subject to a minimum rate of 1%.

In our example above, the purchaser applying for the relief would pay SDLT of £2200 for each flat, as the average value of £220,000 falls within the 1% rate. The total SDLT payable would be £6600, therefore saving a whopping £19,800.

There are exceptions to the relief and prior legal advice should always be obtained before proceeding with a transaction. This reply has been written for the purpose of giving a general overview of the law in this area and is not intended to be relied upon as specific advice.

For further information contact Yildiz Betez