In the Budget the Chancellor surprised many by abolishing multiple dwellings relief for stamp duty land tax.
The policy provided relief for people buying more than one dwelling per transactions, but an external valuation found “no strong evidence that it had done so and that it was being regularly abused”.
Those looking to utilise the relief have until the end of May.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “Jeremy Hunt freely admits this relief was aimed at encouraging investment in the Private Rental Sector, and government figures estimate that MDR was worth £730m to investors between 2016 and 2022. Scrapping this incentive is a surprising blow, at a time when the sector desperately needs support.”
However Charlie Wells, managing director of buying agency Prime Purchase, said: “It is unsurprising that multiple dwellings relief is being abolished as it was open to abuse in some instances and may have been regarded as allowing wealthy people to get away with paying less tax.
“However, I am not sure it will make a huge difference to the Chancellor’s tax take as it involves a relatively limited number of deals.
“Having said that, within an hour of the Budget statement I’d had two clients call me to ask about it so my advice would be to those thinking of utilising this relief to get on with their transaction before 1st June.”
Andrew Noton and Phil Blackburn, partners at chartered accountants and business advisers Lubbock Fine, played down the impact of this policy.
They said: “Scrapping Multiple Dwellings Relief or MDR will mainly impact buyers of 2-5 properties as it reduces the stamp duty land tax where there was a discrepancy in value – a classic example would be a granny flat attached to a larger property.
“Scrapping this relief will also impact someone buying a small portfolio of investment properties of varying values and increase the stamp duty they pay.
“Where there are six or more properties involved there are other reliefs to reduce the stamp duty payable. The scrapping of MDR will therefore only affect a small number of transactions for those with large portfolios (6 plus properties)– those portfolios with large numbers of lower-value properties.”
“This change will also eliminate the dubious claims for MDR which HMRC have been dealing with in recent years by taxpayers who were largely being egged on by unscrupulous tax advisers.”
Paul Atkins, partner and head of property tax at haysmacintyre, said: “While plans to abolish stamp duty for multiple dwellings may come as an unwelcome surprise to those making large scale purchases, it may provide a more level playing field alongside the abolition of the furnished holiday letting regime.
The Chancellor has abolished the Furnished Holiday Lettings regime, a move which will take effect from April 2025. As it stands owners of short-term lets can offset mortgage interest payments against profits, unlike individual landlords operating in the buy-to-let sector.
