Big property investors are facing a new reality: the days of getting a discount on Stamp Duty for buying multiple properties are over! The government has scrapped Multiple Dwellings Relief (MDR), a policy that allowed investors to pay stamp duty based on the average price of multiple properties. This change came into effect on June 1st, meaning that any contracts exchanged after March 6th will be hit with the full stamp duty bill.

What was MDR all about?

Introduced in 2011, MDR was intended to encourage investors to buy multiple properties, like flats within a building, and boost the housing market. But it seems to have had little impact on encouraging bulk purchases.

Loophole loophole

Even worse, some investors found ways to exploit the system. They’d split a single property into two separate units, using MDR to reduce their stamp duty bill. The government clearly wants to close this loophole.

The new rules

So what does this mean for investors?

• No more discounts: If you’re buying multiple properties, you’ll now pay the full stamp duty rate on each one.
• Grandfathering for early birds: If your contracts were exchanged before March 6th, you might still qualify for MDR, but only if the contracts haven’t been altered.
• Still a discount for super-sized deals: Buying six or more residential properties still qualifies for a special rate, but it won’t be as good as the MDR discount.

What’s the government’s motive?

The government says abolishing MDR will raise £385 million in tax revenue over the next five years. It’s also a clear signal that they’re looking to level the playing field for investors, preventing those who buy in bulk from getting an unfair advantage.

Key takeaways:

• Multiple Dwellings Relief (MDR) for stamp duty has been abolished.
• This means investors will now pay full stamp duty on multiple properties.
• The government says the change will raise £385 million in tax revenue.

This change could have a significant impact on the property market, particularly for investors who specialise in large-scale purchases. It remains to be seen how this new rule will shape the future of buy-to-let and property investment in the UK.