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Chancellor Abolishes Multiple Dwellings Relief in Sweeping Budget Move

Published by Chirag
Published Date: March 12, 2024 , Updated Date: April 23, 2024

In a bold move, Chancellor Jeremy Hunt announced the abolition of Multiple Dwellings Relief (MDR) effective from 1 June 2024, citing widespread abuse and a lack of compelling evidence that the relief served its intended purpose. MDR, a component of the Stamp Duty Land Tax (SDLT) regime, aimed to reduce total payments when purchasing multiple properties in a single transaction. However, Hunt argued that it failed to effectively support the private rental sector and had become a target for abuse.

Impact on Investors and Revenue

The decision to scrap MDR is expected to raise £70 million in its inaugural year (2024/25), soaring to £220 million in the first full year of implementation. Projections estimate a further increase to £385 million annually by 2028/29, totalling £1.3 billion over five years. Despite concerns about potential negative impacts on legitimate investors, the Chancellor emphasised the move's benefits, especially when combined with the ability to claim commercial SDLT rates on purchases of six or more dwellings.

Multiple Dwellings Relief Ends

Experts in the field offered varying perspectives. Matt Spencer, Tax Partner at Kingsley Napley, acknowledged the abuse of MDR but cautioned that its abolition might hinder some legitimate investors. On the positive side, he noted the mitigation through commercial SDLT rates. Aidan Coleman, Director and Stamp Taxes Leader at PwC, highlighted the decision's alignment with research findings indicating MDR's failure to meet its objectives. However, concerns were raised about increased tax costs in specific property transactions.

Timing and Transitional Measures

The effective date of 1 June 2024 was confirmed, but contracts exchanged before 6 March 2024, will still be eligible for MDR if applying for the relief. James Bailey, housing leader at PwC, expressed concerns about the potential adverse impact on institutional investment in the growing build-to-rent market, emphasising the missed opportunity in the Budget to support aspiring homeowners and SME supply chains dependent on a thriving residential development sector.

The Chancellor's decision to abolish MDR sends ripples through the property investment landscape, addressing concerns of abuse but raising questions about potential impacts on legitimate investors and the broader housing market. The move aligns with the government's focus on reforms for a balanced and sustainable property sector.

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