As an encouragement to investment in residential property, a new method of calculating SDLT on purchases of multiple dwellings has been introduced.  The rate of SDLT which applies to consideration provided for the acquisition of multiple dwellings will now be determined by reference to the mean consideration attributable to the dwellings (i.e. the amount of the consideration, divided by the number of dwellings), rather than their aggregate value.

This new method of charge is given effect by virtue of a relief (section 58D Finance Act 2003), and therefore must be claimed in a land transaction return.  The relief cannot be used to reduce the rate below 1 per cent.

The rate of SDLT which applies to consideration attributable to interests in land other than dwellings, if any, is the rate which would apply in the absence of the relief.

Superior freehold or leasehold interests in dwellings subject to leases granted for an initial period of 21 years or more are not eligible for relief.

The relief includes provision for ‘off-plan’ purchases where construction or adaptation of the property for residential use may not have commenced by the effective date of the transaction. It also provides for the tax calculation to be adjusted if the number of dwellings involved is reduced within three years of the effective date of the transaction.

The new relief has been broadly welcomed by the property sector, and it is hoped that the relief will stimulate investment in the residential property market.  However, care must be taken to ensure compliance with the highly prescriptive legislation in applying the new relief.

 Who to contact?

For further information call us on 0115 983 5580.