Tom Tasharrofi is a Legal Assistant in the Residential Conveyancing Department and can be contacted on 01323 644222 or tt@stephenrimmer.com
If you wish saving on the Stamp Duty Land Tax you pay on acquisition of commercial and/or residential property, then look no further.
So what is Multiple Dwellings Relief (MDR)?
MDR is a relief from Stamp Duty Land Tax our solicitors can claim on your behalf, which can significantly decrease the amount of Tax you pay on property acquisition.
This applies where you are buying a building with multiple dwellings.
What constitutes as a dwelling?
This could be the acquisition of a freehold property made up of multiple flats, A commercial shop with two or more dwellings attached; or a property with a granny annexe.
A dwelling does not necessarily have to be a separate flat. The rules stipulate that you must have all the amenities of a dwelling to allow for independent living, i.e. you must have the means to sit, eat and sleep to constitute as a dwelling.
Therefore, if you have a flat with three rooms and each of those rooms has both an ensuite and a kitchen then each of those rooms may constitute as a dwelling. This is also known as an HMO (a House in Multiple Occupation).
How is MDR calculated?
This is more easily explained by giving an example (note that this is calculated irrespective of the Stamp Duty Holiday) –
I acquire a freehold block consisting of 5 flats. Each flat is valued at £100,000, making the total value of the freehold £500,000.
I then calculate the amount of stamp duty payable on 1 dwelling. Normal rates of stamp duty do not apply below a value of £125,000 (and currently up to £500,000 until the 1st of April 2021) therefore you will only be paying the plus 3% additional rate stamp duty per dwelling. This is £3,000.
I then multiply this figure by the number of dwellings to come to the amount of stamp duty payable with the relief applied:
- Stamp Duty payable with MDR applied: £15,000.
- Stamp duty payable without MDR applied: £30,000.
Think that is a lot of money? If your solicitor does not think to claim Multiple Dwellings Relief (MDR) on your behalf then, in this scenario, the Stamp Duty you will be liable to pay is £30,000 instead of £15,000.
Furthermore, if you think your previous solicitor has missed this on your recent property acquisition and as a result you have paid the full amount of Stamp Duty, you may still be eligible to claim it back. Our solicitors can revisit your stamp duty claim within 12 months of completion and see if you are eligible for Multiple Dwellings Relief (MDR).
Need advice?
If you would like to find out more and see if you are eligible for relief in your property acquisition, or if you would like to find out about the countless other ways our solicitors can save you both time and money please contact Stephen Rimmer LLP on 01323 644222.
