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The end of May does not usually represent a peak period for completing property transactions, but some taxpayers will be sweating over getting their deals over the line before 1 June 2024. Failure to do so could leave some facing the prospect of a much higher stamp duty land tax (SDLT) bill due to the abolition of ‘multiple dwellings relief’ (MDR). Similar reliefs are still currently available in Scotland and Wales, although earlier this year the Welsh government consulted on proposals to abolish land transaction tax relief for multiple dwellings.

MDR has been a niche but very important SDLT relief. It currently may apply for those buying homes with a ‘granny annexe’ and where buy-to-let landlords are looking to transfer their rental property portfolio to a company or third-party purchaser.

The problem has been that HMRC consider MDR has been the subject of abuse, wasting valuable time and resource dealing with illegitimate claims. As noted in this by the Chartered Institute of Taxation, highlighting some of the difficulties faced by HMRC with SDLT reclaims, HMRC considered 40% of MDR reclaims were contentious in a sample review. 

Despite consulting on potential reforms to the relief to resolve this, the outcome has ultimately been to abolish it all together. That may be the right answer in the short term from a simplicity perspective, but it will arguably need looking at again in the longer term, as SDLT barriers still exist that MDR has helped to overcome.

One such group of taxpayers has been highlighted by Jeremy Hunt himself when he ran for the Conservative party leadership. We have an ageing population and we could see more families looking for properties that include separate accommodation for elderly relatives. Back in 2019, the chancellor suggested it was a '' that so many older people are forced to live alone.

Many properties benefitting from separate annexed accommodation will be detached. The indicate that the average cost of a detached house in the UK was around £440,000 in March 2024. According to , the cost of building a ‘granny annexe’ in 2023 could be as much as £100,000. For the purposes of our calculations, we have used an estimate of £550,000 to represent the cost of an average detached property with a separate granny annexe within its grounds.

The standard SDLT payable on a purchase for £550,000 would be £15,000 (assuming first time buyers’ relief does not apply, and the acquirer does not already own another residential property). By comparison, if MDR was available then the SDLT payable could have been as low as £5,500 (again, assuming first time buyers’ relief does not apply, and the acquirer does not already own another residential property). 

So, the SDLT due from 1 June 2024 could be significantly higher and, in this example, as much as a 273% increase. This increase in SDLT could act as a significant disincentive for families considering buying a home with a separate annexe and act as a further constraint in freeing up housing stock for younger buyers.