A stamp duty loophole that has thus far flown under the radar could allow landlords to claim multiple dwellings relief to offset the changes to stamp duty.
In the 2015 autumn Statement the Chancellor announced a 3 per cent stamp duty surcharge on second homes and buy to let properties. Corporate landlords with 15 or more properties had the potential to be made exempt, however a recent government consultation deemed that the higher rates will be applied to all cases regardless of size.
However, in an email addressed to consultation respondents, the Treasury says that landlords can claim multiple dwellings relief to offset the lack of stamp duty relief for those purchasing six or more properties at once.
The email reads: ‘The Government also notes the existing flexibilities within the SDLT system available to significant investors in the property market, including multiple dwellings relief and the ability to pay the non-residential rates when purchasing six-or more properties in the same transaction. Both of these flexibilities will remain.’
An HM Revenue & Customs statement regarding this explains: ‘Where two or more dwelling are purchased in a single or linked transaction multiple dwelling relief (FA2003/Schedule 6B) can be claimed. The higher rates will apply to claims for multiple dwellings relief. Where 6 or more dwellings are purchased in a single transaction the purchaser can choose whether to apply the non-residential rates of SDLT.’
The relief has the potential to significantly reduce the impacts of stamp duty. Mortgage Strategy calculated that if a company purchased 10 flats for £1 million in total and claimed multiple dwellings relief, the firm would save £9,500 on a total stamp duty bill of £39,500.
They explained that the £30,000 figure is worked out by taking the average flat price of £100,000, multiplying by 3 per cent and then dividing by the number of flats.
Senior technical manager at Ray Boulger, John Charcol, says: ‘It is not so much the Treasury offering investors an olive branch, as it is bringing people back to where they should be anyway. So my interpretation of that comment is the Treasury saying ‘look, we are effectively already giving people who are buying more than six properties the opportunity to save on stamp duty.’
Click here to read original article “Stamp Duty Loophole Revealed”
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