As of 1 June 2024, multiple dwellings relief (MDR) was abolished in England and Northern Ireland.
However, the good news for property investors is that MDR is still available in Scotland!
What is Multiple Dwellings Relief (MDR)?
MDR is available on most transactions that involve the purchase of more than one dwelling in a single transaction or in a series of linked transactions. MDR ensures that the buyer does not pay Land and Buildings Transaction Tax (LBTT) at a higher rate than if the properties were bought separately and lower rate bands would have applied on each purchase. This can also help mitigate the impact of Additional Dwellings Supplement (ADS).
There is a prescribed minimum amount of LBTT where MDR is claimed but the savings can still be very substantial for the purchaser.
There are also rules which apply where if there are six or more dwellings in a single transaction, which in some circumstances allow the non-residential rates of LBTT to apply and MDR to be claimed while retaining the benefit of the non-residential rates and thus an opportunity to also claim exemption from ADS.
Of course, things may change in the future but for now Scotland has a competitive advantage for investors looking to buy residential properties – a very welcome advantage in a challenging market!
This can be a complex area and we would recommend you speak to our Commercial Real Estate team if you want to ascertain the extent to which the MDR rules may apply to your property purchase - get in touch with James Jack or your usual Burness Paull contact.
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