The recent budget announcement by the Chancellor included the announcement that Multiple Dwellings Relief (MDR) on residential property transactions will be abolished, effective from 1st June 2024.

Introduced in 2011, MDR aimed to incentivise investment in residential property and the private rented sector. Under this relief, purchasers of two or more dwellings in a single transaction or linked transactions could benefit from Stamp Duty Land Tax (SDLT) rates calculated based on the average value of the dwellings, rather than their aggregate value. However, despite its intentions, research commissioned by HMRC revealed insufficient evidence to support the notion that MDR significantly contributed to promoting residential property investment.

It’s important to note that MDR will continue to apply to transactions where contracts were exchanged on or before 6th March 2024, even if completion occurs after 1st June 2024, provided there is no variation of the contract after the aforementioned date.

Furthermore, buyers of six or more residential dwellings will still have the option to pay SDLT at non-residential rates, potentially resulting in a considerable reduction in SDLT payable. However, it’s worth noting that even with this option, SDLT may often be higher compared to cases where MDR could be claimed.