Proposals to scrap LLT multiple dwelling relief

A short consultation has been issued by the Welsh Government that would abolish LTT (Land Transaction Tax) Multiple Dwelling Relief from 1 June 2024 and would mean landlords purchasing more than one property from the same seller in a single transaction or linked transactions will no longer be able to claim back a proportion of their LLT liability.

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Why now?

The UK Government announced in the Spring Budget 2024 that MDR (multiple dwelling relief) for Stamp Duty Land Tax (SDLT) will be abolished in England and Northern Ireland from 1 June 2024, which will result in a reduction to the Welsh Block Grant estimated to be up to £8 million a year.

The Welsh Government anticipates that the abolition of LTT MDR would broadly offset this loss of funding to the block grant. 

More details on the proposals can be found here  →

How the current rules work

MDR is a partial relief of LTT which reduces the overall tax liability for a taxpayer. It can be claimed when a buyer acquires more than one dwelling from the same seller, either in a single transaction on the same effective date or in linked transactions.

MDR was originally introduced to reduce a potential barrier to investment in residential property and to promote the private rented sector (PRS) housing supply.

Although its effectiveness isn’t mentioned in the Welsh Government consultation, in his Spring Budget speech, the Chancellor claimed the equivalent relief in England had been widely abused.

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Six dwellings rule will also be removed

Currently, when buying six or more dwellings in a single transaction, the taxpayer can choose between treating the transaction as non-residential, and paying LTT at the non-residential rates, or treating the transaction as residential and paying the higher residential rates, in which case they can claim MDR.

If LTT MDR is abolished, taxpayer discretion in transactions involving six or more dwellings would end, and all such transactions would be charged at the non-residential rates.

There is a possibility that this could create unfairness for people buying between two and five dwellings in a single transaction, compared to those buying six or more dwellings. In some cases, those buying fewer properties might pay larger amounts of tax, as well as at a higher rate, than those purchasing more.

For example, if MDR wasn’t available a buyer acquiring five dwellings costing £300,000 per dwelling (total consideration of £1,500,000) would pay £171,200 in LTT at the higher residential rates, but a buyer acquiring six such dwellings (total consideration £1,800,000) would pay £85,750 in LTT at the non-residential rates.

Working for our members

Propertymark will respond to the consultation on behalf of members to represent their interests and if you have any information or insight, please share it with our Policy Team at [email protected].

We also encourage individuals to respond to the consultation directly. The consultation closes on 19 May 2024.