What is multiple dwelling relief? | SDLT calculations on MDR

What is multiple dwelling relief?

What is multiple dwelling relief?

At CloudCo we are often asked what reliefs are available to offset taxes when buying and selling multiple properties in the same transaction. Here we explain the best way to claim Multiple Dwellings Relief (MDR).

Multiple Dwelling Relief or “MDR” reduces Stamp Duty Land Tax (SDLT) – the tax paid on the purchase of property in England and Northern Ireland. The relief reduces the stamp duty on the purchase of property when more than one “dwelling” forms part of a single purchase.

The government introduced the relief in 2011 to encourage investment in residential property. The relief is designed to reduce the cost of stamp duty when buying more than one dwelling as a single transaction or as linked transactions.

In this way, each dwelling is in benefit of the nil-rate and lower rate bands of SDLT, which would not apply were MDR not claimed.

This relief on the purchase of multiple dwellings through MDR is available to individuals who want to purchase more than one dwelling as well as being open to businesses too. But unless you are familiar with all the rules and confident about the calculation, then you should hire a conveyancing solicitor or a property tax accountant to help with claiming multiple dwellings relief on your behalf.

MDR should be claimed via an SDLT refund claim with HMRC within 12 months of the purchase.

What does multiple dwellings relief (MDR) mean?

Multiple dwellings relief (MDR) is a reduction on the tax that must be paid on the purchase of a property in England and Northern Ireland, known as Stamp Duty Land Tax (SDLT).

The relief is designed to reduce stamp duty when more than one “dwelling” forms part of a single purchase.

Multiple dwellings relief can financially bring big savings. This is because the total cost of all the properties purchased in one transaction is lumped together as one cost, with the total cost of SDLT calculated based on the average price of each dwelling.

What does a “dwelling” mean?

“Dwelling” is the key word of the SDLT relief. A “dwelling” where MDR is concerned, is a one-household building (i.e. a house or a flat), but this also includes the attached land: a garden, courtyard or a separate garage block.

What does a “dwelling” NOT mean?

The relief does not apply when there is only “a plan” in place to construct multiple dwellings as planning to construct dwellings is not within the MDR meaning of the word “dwelling”.

Construction of the dwellings must have started before/on the date the transaction came into effect.

Are there exceptions to the rules on MDR?

There are some exceptions to the rules governing MDR such as off-plan purchases, for example, but the rule of thumb is to seek expert advice from a solicitor or tax accountant before the purchase goes ahead.

Can you claim multiple dwellings relief?

This relief on stamp duty on the purchase of multiple dwellings via MDR is available to individuals who want to purchase more than one dwelling and it is open to businesses too.

Anyone can claim MDR within the rules, the main stipulations of which are:

  1. The definition of a “dwelling”A “dwelling” is defined as a house, flat, or place of residence. You can claim multiple dwelling relief as an individual or as a company when purchasing multiple properties.
  1. Types of “dwelling” eligible for MDR
  • Two or more single dwellings in a single transaction;
  • Dwellings that are part of an arranged scheme or a series of linked transactions;
  • Dwellings above a shop or dwellings with offices attached;
  • A dwelling with an annexe, outbuildings or holiday cottages;
  • A large property converted into two or more self-contained dwellings.
  1. Application of the word “multiple”Your transaction must consist of a minimum of two dwellings to be eligible for MDR, but MDR can apply to a single dwelling if it forms part of a “linked transaction” with a “linked person” (see above).

When does MDR NOT apply?

MDR does not apply to the transfer of a freehold reversion or head lease if one of the dwellings has a long lease of 21 years or more.

A freehold reversion/head lease, or any other non-residential property included within the purchase will be subject to the normal rate of SDLT without MDR.

What properties apply?

In the context of SDLT and MDR, the properties that apply as a “dwelling” are defined by HMRC as: A building (or part of a building) suitable for use as a single dwelling (occupied by one household) or in the process of being constructed/adapted as one.

What property types are eligible for multiple dwellings relief, according to HMRC’s definition?

The property or “dwelling” must be self-contained and have its own entrance, kitchen, sleeping area and bathroom. If it’s a new-build, it must already be under construction on the date or before the date of the MDR/SDLT translation.

Properties include:

  • Houses, apartments or flats;
  • A self-contained annex purchased with a house;
  • A mixed-use property, e.g. a shop with a flat above;
  • A subsidiary to a main dwelling, such as an annexe or “granny flat”

“What is a “subsidiary” to the main dwelling?”

  • On the same grounds as the main dwelling or attached to it;
  • The value of the main dwelling (of which the subsidiary dwelling is part) must be worth at least two-thirds of the total purchase price of the two dwellings;
  • The annex or granny flat must be a self-contained dwelling where the occupant can lead a private domestic existence

How is stamp duty land tax calculated on multiple dwellings?

Stamp Duty Land Tax is calculated on multiple dwellings by taking the total cost of the purchase and then dividing it by the number of dwellings purchased.

How do you calculate SDLT for MDR?

As pointed out, the calculation for SDLT rates on multiple dwelling purchases can be quite complex. The best thing to do – unless you are 100% confident that you know all the rules and can do the tax calculation to the letter of the law – is to seek advice and guidance from an experienced tax accountant such as CloudCo or a lawyer.

Initially, to claim the relief, you need to work out the tax due to HMRC:

1.       Divide the total amount paid for the properties by the number of dwellings;

2.       Work out the tax due on this figure;

3.       Multiply this amount of tax by the number of dwellings.

Example (as per HMRC)

You buy four houses for £1 million;

£1 million divided by 4 is £250,000;

You do not pay SDLT on the first 250,000

Since the minimum rate of tax under MDR is 1% of the purchase price of the dwellings, according to this calculation, you will pay £10,000.

Tax rates on MDR

The sum to be paid will be subject to a minimum rate of 1% or 3% depending on the situation.

  • When does the 1% tax rate apply?

Under MDR, the minimum rate of tax to pay is 1% of the purchase price of the “dwellings”.

  • When does the 3% tax rate apply?

The 3% tax rate applies if the multiple dwellings are purchased in addition to other residential properties of the person.

  • When does the 3% tax rate NOT apply?

The 3% SDLT surcharge does not apply to the commercial element of the “dwelling” purchased (e.g. a flat purchased above a shop or residential properties with offices).

Also, if you are buying six or more “dwellings” you can apply non-residential SDLT rates, which are lower than residential rates, but you must seek advice unless you know the rules.

HMRC has updated the SDLT/MDR manual following the mini-budget of 23 September 2022. See the manual here.

What are linked transactions

“Linked transactions” are when multiple property transactions take place in the same company in a group or between a buyer and seller who are “linked persons”. If you transfer your personal property portfolio to your limited company is one such example.

Companies can sell property to other companies, and the purchaser can benefit from multiple dwelling relief, but only if:

  • The buyer and seller are both companies;
  • Both companies are members of the same group on the date of the transaction.
  • The transactions are part of a single arrangement or scheme or part of a series of transactions (e.g. if you buy a house with a large garden and sell the garden to a relative (“a linked person”) to build another “dwelling”; the dwelling is already in the process of construction).

See HMRC’s guidance.

What is the incentive here?

“Linked transactions” save purchasers money in tax by applying MDR to the average price of each dwelling in the transaction to reduce the amount of SDLT due.

Without MDR, usually the separate value of each property would be lumped together and then the SDLT would be applied to all the properties in the transaction, which would raise the rate of SDLT due.


What if you are already a homeowner?

Purchasers hoping to benefit from MDR who are already homeowners, will have to pay the 3% SDLT surcharge on each additional residential property purchased.

Exceptions to this rule include buying a home to replace a current home (e.g. on separation or divorce) and holiday lettings.

What if you mistakenly overpaid stamp duty on your property purchase?

It is possible to retrospectively claim overpaid SDLT in cases where a surcharge on a multiple dwelling was paid inadvertently.

How and when should you claim MDR?

Multiple dwellings relief should be claimed at the time of the property purchase via a solicitor, although MDR can be claimed retrospectively for up to 12 months from the filing date of the transaction.

What if the circumstances of the multiple dwelling purchase changes?

If the number of dwellings is reduced within three years of the MDR transaction, you will need to recalculate the tax due and file another tax return. This sort of scenario might occur if you combine two self-contained flats into one dwelling, for example.


Without doubt, Multiple Dwellings Relief or “MDR” reduces the amount of Stamp Duty Land Tax that would normally be due when purchasing multiple “dwellings” in a single purchase.

Applying for multiple dwellings relief if you buying two or more dwellings or residential properties as part of the same transaction, or as part of a series of linked transactions, is worth the effort.

But … it is also worth the effort and the additional expense to seek advice from an experienced property tax accountant, solicitor, and conveyancer to make sure you stay with the rules of this complicated area of Stamp Duty and Land Tax.

This is an area of tax planning where it is possible to fall foul of underpaying or overpaying tax, which could result in retrospective tax bills and potentially fines relating to tax avoidance or the hassle of retrospectively reclaiming overpaid tax.

Our advice is to do it once and do it right the first time to make the most of the potential of this lucrative SDLT relief. If you would like to know more about how to claim multiple dwellings relief then contact CloudCo today!

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