Country House Manager, Claire Carter, shares her insight into the discontinuation of multiple dwellings relief (MDR) as it sparks significant changes in stamp duty laws, and how this may impact buyers and sellers alike.
Chancellor Jeremy Hunt recently announced that from 1st June, the government will discontinue multiple dwellings relief (MDR). This change has sparked important discussions among buyers and sellers, particularly those in the country house market, prompting considerations of its implications and necessitating swift action for those in the process of purchasing properties with multiple dwellings.
Previously, MDR facilitated reduced stamp duty payments by averaging the duty across all properties acquired, thereby lowering the tax burden. Its discontinuation may lead to increased expenses for buyers, requiring careful financial planning and timely decision-making.
MDR, introduced in 2011 to incentivise private rentals, provided tax reductions to landlords acquiring multiple properties simultaneously. However, its impact extended beyond urban investments, making rural homes with additional living spaces more accessible and appealing to families seeking expanded accommodations.
The allure of properties with multiple dwellings lies in their versatility. These spaces cater to diverse needs, accommodating live-in staff, autonomous living arrangements for elderly relatives, or offering independent quarters for adult children. Especially, in today's landscape with remote work trends and a challenging rental market, annexes and converted spaces have gained an increase in demand.
Perhaps there is actually more that should be done to encourage multigenerational living arrangements – this would certainly address the housing shortage and lack of retirement homes we have in this country. Plus, stamp duty savings are most commonly used to fund renovations and repairs in older, rural properties, so a higher tax burden could turn buyers off fixer-uppers or dated properties too.
Timing considerations should come into play now, particularly for families planning relocations around the end of the school year.
So, for buyers in the midst of property purchases involving at least two separate dwellings – such as homes with annexes or converted outbuildings – the pending June deadline highlights the importance of speeding up proceedings where possible, otherwise they could result in substantial stamp duty payments, potentially reaching six figures.
Author:
Claire Carter
Country House Manager
ccarter@johndwood.co.uk
