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  • Overview

    The Government is consulting on possible changes to two areas of the Stamp Duty Land Tax (SDLT) regime.

    • Mixed use property: changes to the way SDLT is calculated for purchases of mixed-property - that is, purchases which consist both of residential and non-residential property
    • Multiple dwellings relief: reform of Multiple Dwellings Relief available on the purchase of two or more dwellings


    The aim of this consultation is both to make the system fairer and to reduce the scope for incorrect or abusive claims. The consultation is due to close on 22 February 2022 and a second consultation will then be published on the detail of the changes selected. Since the consultation has been driven by perceived loopholes in the SDLT system it is not unlikely that the Government will seek to make the changes later in 2022.

    Mixed use property

    Mixed-property purchases vary greatly in the relative amounts of residential and non-residential property present and the uses to which the non-residential property element is put. Mixed-property purchases range from a country house with some land let for grazing, to shops with flats above, to large scale city centre developments comprising ground floor retail outlets with floors of flats above

    When SDLT was introduced, the tax rates on residential and non-residential property were closely aligned and so taxing mixed-property at the non-residential rates did not create a significant tax advantage. However the rates and bands have diverged significantly and some buyers try to present what in reality is residential property as non-residential to take advantage of lower commercial tax rates.

    Summary of changes proposed for mixed use property

    Option 1: A new apportionment method of calculating tax in mixed-property cases. Apportionment would mean that the residential portion of a mixed-property purchase would be taxed as residential property and the remaining, non-residential portion of a purchase would be taxed as non-residential property.

    Option 2: A threshold approach, whereby a purchase is only treated as mixed-property if the non-residential element is more than a certain proportion of the consideration, for example more than half.

    Multiple Dwellings Relief (MDR)

    MDR was introduced to reduce the rate of SDLT payable on the purchase of multiple residential properties so that it is closer to that charged when purchasing those properties separately. This was to help strengthen demand for, and reduce barriers to, investment in residential property, promoting the supply of private rented housing. The current rules apply to both non-business and business purchases. This means that MDR is available where, for example, a private individual purchases a house which has a separate annex or outbuilding which itself constitutes a separate dwelling.

    Summary of changes proposed for MDR

    Option 1: Allow MDR only where all the dwellings are purchased for a ‘qualifying business use’. A property acquired for a ‘qualifying business use’ would be one that is acquired for development or redevelopment and resale or exploitation as a source of rents. The ‘qualifying business use’ requirement must be satisfied either throughout a three-year post-transaction period, or until the property is sold if earlier.

    Option 2: Allow MDR only in respect of dwellings if they are purchased for a ‘qualifying business use’. The rules and conditions for this option would be largely the same as for Option 1, but with the difference that MDR would not be entirely lost if some of the dwellings were not acquired for a ‘qualifying business use’. 

    Option 3: Restrict MDR by introducing a ‘subsidiary dwelling’ rule. Under this option, a part of a building, or a building within the grounds of another dwelling, would not count as a separate dwelling for the purposes of MDR unless its value is a third or more of the total price attributable to the property as a whole.

    Option 4: MDR is currently available where two or more dwellings are purchased in a single transaction, or as part of a series of linked transactions. Under this option, MDR would be available only where three or more dwellings are purchased. This would be simplest option for change.

    Developers and investors who think they will be adversely affected should consider responding to the consultation so their views can be taken into account. The consultation document can be found here.

  • Related Services

    Commercial Property & Development

    Our Commercial Property & Development team give commercially orientated advice and ensure a speedily concluded transaction whether you are purchasing, selling or leasing commercial property.

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