Chancellor Jeremy Hunt’s Budget is set to hit Build To Rent.

The British Property Foundation is reacting to news that Multiple dwellings relief is to be scrapped following this week’s Budget.

It currently enables purchasers of multiple residential properties to pay stamp duty based on the average price per dwelling. 

Given that rates increase the higher the property price, this can lead to substantial savings where a number of residential properties are purchased within the same or linked transactions.

BPF chief executive Melanie Leech says: “Abolishing SDLT multiple dwellings relief will hit the Build To Rent sector at a time when the Government should be doing everything in its power to encourage more long-term investment into professionally managed rental homes. This will hinder rather than stimulate the efficiency of the housing market.”

Accountancy firm PKF Francis Clark says: “Whether a purchase comprises more than one dwelling can be a matter of judgement, particularly where adjoining annexes or properties in the garden or grounds of a main house are concerned. 

“However, instead of tightening the rules or dealing with some nuances (including the treatment of mixed-use purchases which could benefit from a multiple dwellings relief carve-out which was not surcharged), the Government has removed the relief entirely.

“This change may well put pressure on other areas of the SDLT regime, including:

– The rules concerning the purchase of six or more residential dwellings acquired in a single transaction. By default, these transactions are taxed at non-residential rates of SDLT. As the non-residential rates are at a maximum of 5%, these normally compare very favourably to the residential rates, which are a maximum of 15% for a UK resident purchaser;

– Whether the property is mixed use. Where a purchase contains both residential and non-residential property, the entire transaction is subject to the lower non-residential rates. The abolition of MDR could lead to further cases considering whether land is garden or grounds of the dwelling or whether it is non-residential (e.g. where in commercial use).”