Stamp Duty relief on properties split into multiple dwellings

Stamp Duty relief on properties split into multiple dwellings

10:41 AM, 7th February 2020, About A year ago

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An agent marketed a UK residential property for £795,000 but with just 1% Stamp Duty, i.e  £7,950.

The agent had NOT made a mistake!

Ordinarily, the Stamp Duty on a £795,000 investment property would  be £53,600 after factoring in the 3% additional rate.

Our client, who was extremely interested in buying the property, queried this with us, so we took a closer look.

The property was subdivided into 20 separate dwellings. Accordingly, Multiple Dwellings Relief could be applied.

The HMRC manuals state:-

You can claim relief when you buy more than one dwelling where a transaction or a number of linked transactions include freehold or leasehold interests in more than one dwelling.

If you claim relief, to work out the rate of tax HMRC charge:

  • divide the total amount paid for the properties by the number of dwellings
  • work out the tax due on this figure
  • multiply this amount of tax by the number of dwellings

The minimum rate of tax under the relief is 1% of the amount paid for the dwellings.

Source: https://www.gov.uk/guidance/stamp-duty-land-tax-relief-for-land-or-property-transactions#sdlt-relief-for-multiple-dwellings

Accordingly, the purchase price of £795,000 is divided by 20 dwellings to come up with a figure of £39,750 per dwelling. This is below the £40,000 figure for which the additional 3% rate of SDLT is applied. Therefore, only the 1% minimum rate of SDLT applies, in this case £795,000 X 1% = £7,950.

The above applies to HMO’s, blocks of flats or any other residential property which is registered at HM Land Registry on a single title but actually comprises multiple dwellings. Student houses which are let by the room on AST’s are another good example.

If the property had been owned within a Single Purpose Vehicle Limited Company the Stamp Duty could have been even lower. Rather than selling the property, the company could sell its shares. The Stamp Duty on share purchases is just 0.5%.

Do you think you might have overpaid Stamp Duty ?

There is a strict 12 month window of opportunity to reclaim overpaid SDLT from the Stamp Office.

However, a negligence claim can be bought against your Conveyancing Solicitor for up to six years.

Either way, if you think you might have overpaid and need some help to reclaim we’ve got you covered.

We will take all the risk, i.e. we will assess your case free of charge and if we think a refund is due we will process your claim on a Conditional Fee Arrangement basis (commonly known as ‘no-win-no-fee’).

If we don’t recover any money for you, our time and any applicable Court fees will be our problem to deal with, not yours.

To make an enquiry, please complete the form below and we will contact you to let you know what information we will need.

Enquiry form for reclaiming overpaid Stamp Duty