New SDLT Relief for Residential Portfolios

Following the Budget on 23 March 2011, the Finance (No. 3) Bill 2011 (Bill) has just been published. The Bill sets out the details of a new relief from SDLT ("Multiple Dwellings Relief") for purchasers of two or more dwellings. 

Purchasers of portfolios of properties are often dismayed to find that, even though the average value of a property in the portfolio is relatively low, the SDLT rules require that all the properties be aggregated in deciding what rate of SDLT is payable. So, a portfolio of 10 residential properties with an average value of £100,001 means the top rate of SDLT (4%, but rising to 5% after 6 April 2011) is payable on the value of each property.

Multiple Dwellings Relief works by using the arithmetic mean of the properties in the portfolio, rather than the aggregate value, in arriving at the rate of SDLT to be applied. The aggregate value of all dwellings in the portfolio is divided by the number of dwellings. If that value would give a zero rate of SDLT, then 1% is used.

On the figures used in the above example the SDLT rate would be 1% if Multiple Dwellings Relief is claimed. That is a £40,000 SDLT saving.

What is a "dwelling" for the purpose of Multiple Dwellings Relief? Dwelling is given a particular definition in the Bill. It is wider than intially might be thought. It includes not only a building used as a residence, but is extended to cover a building in the process of being constructed or adapted for use as a single dwelling. That means Multiple Dwellings Relief is available for purchases "off plan".

If there are changes in circumstances within 3 years of the purchase, then they must be reported to HMRC if more SDLT would have been payable had the change in circumstances been known at the time of the purchase. For example, if there is a purchase off plan, but the number of dwellings is fewer than thought when the land was purchased, then more SDLT might be payable.

Proposed purchasers of portfolios of dwellings might wish to take account of Multiple Dwellings Relief when in a competitive tender.

Unfortunately, Multiple Dwellings Relief will only come into force after the Bill is passed, which is likely to be in June 2011 at the earliest.

If you have a question about SDLT or any other tax, please contact Nasim Sharf on 01482 337336, email

Posted on: 04/04/2011

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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