Disclaimer: MDR has been abolished and can no longer be claimed for transactions completing or substantially performed on or after 1 June 2024. However, if you bought more than one dwelling, you could still claim MDR under these conditions:
- Contracts were exchanged on or before 6 March 2024
- Contracts were substantially performed before 1 June 2024
- Contracts completed before 1 June 2024
Did you know you could be buying two different residential properties with the same purchase price and still pay less Stamp Duty and Land Tax (SDLT)?
This can be achieved by through various reliefs that are in place for Stamp Duty and Land Tax but the one we are focusing on in this article is Multiple Dwellings Relief.
Three Types of Student Accommodation
- Student hall of residence owned by educational establishments,
- Residential accommodation other than “hall of residence” and,
- Ordinary residential accommodation let for students.
Let’s dive into them one by one!!
Now that we are familiar with student accommodations and its types let’s dive Multiple Dwellings Relief.
When can a Student Accommodation be counted as a separate dwelling?
Facilities of dwelling is very important in determining how many dwellings there are.
Following are few basic criteria for a dwelling to qualify for a separate dwelling:
The aspects mentioned above are considered important; the lack of one of them can cast significant doubt on whether the area in question could be considered suitable for use as a separate 'single dwelling'.
Learn More Here: Multiple Dwellings Relief - A Complete Guide.
Examples of Student Accommodation with Multiple Dwellings:
Example 1,
A company purchases a block of flats for students only. There are separate lockable entrances on each floor from the common staircase. Once you enter the door, each floor has several study bedrooms with attached bathrooms, one kitchen, and a common room. In addition, each floor has access to utilities such as water, electricity, heating, etc. Since these blocks of flats can exist independently, each floor in this building qualifies for a separate dwelling.
Example 2,
Individual study bedrooms that do not afford students the cooking and other facilities required for private domestic existence do not qualify as a dwelling.
Whereas a block of purpose-built or adapted self-contained student flats does for relief.
Student Accommodation Qualifies for Multiple Dwellings Relief, but How Much can I Save?
How much you can save depends on several factors such as number of dwellings, purchase price, applicable SDLT rate, etc.
Let us understand this using example.
Mr. A purchases a building with 4 flats for students only at a consideration of £1.2 million.
There are separate lockable entrances on each floor from the common staircase. Once you enter the door, each floor has several study bedrooms with attached bathrooms, one kitchen, and a common room.
In addition, each floor has access to utilities such as water, electricity, heating, etc. Therefore, each floor in this building qualifies for a separate dwelling.
- Without MDR, the SDLT for the transaction, including the 3% surcharge, would have been £97,250.
- If MDR is claimed, the SDLT payable would be £46,000.
- MDR reduces the SDLT payable by £51,250.
SDLT rates applied in this calculation are based on the rates for the tax year 2021/22
Conclusion
We understand the house you want to purchase may differ from the one we discussed above.
There is no straightforward answer as to whether a student accommodation can qualify for Multiple Dwellings Reliefs. It depends on the property's structure and use, which can be tricky to identify.
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