Reflecting on Multiple Dwelling Relief changes discussed at our recent Property Matters Panel

At the recent Property Matters Panel in Bristol, hosted by Angela Niering-Wren, a senior commercial banker at Arbuthnot Latham, a vital discussion unfolded regarding the abolition of Multiple Dwelling Relief (MDR). This change, significant for property investors, spurred attendees to seek advice from their accountants to understand the financial implications further.

Here is a quick-fire Q&A with Angela on the MDR discussion:

How did the debate about MDR unfold during the panel?

“The change to MDR surprised many and was a hot topic at our panel. Previously, MDR allowed investors to reduce stamp duty costs significantly when purchasing multiple properties simultaneously. However, the recent abolition means that investors now face higher upfront costs, as they must calculate stamp duty on the total purchase price of linked properties rather than benefiting from an averaged cost,” said Angela.

What immediate impacts do you foresee for investors?

“The immediate impact is financial, with increased stamp duty costs potentially changing the landscape of investment strategies. Many investors might reconsider the scale and frequency of their purchases or look to separate transactions strategically to mitigate these new costs,” Angela explained.

Clare Day from HCR Law explained the changes in stamp duty calculations due to abolishing multiple dwelling relief. Previously, for two properties priced at £825,000 and £625,000, the stamp duty would be calculated on average, resulting in a total duty of £87,000 under the old rules. With the new regulations, this changes to £123,250, reflecting a significant increase in tax burden.

How did the attendees react to this change?

“The discussion resonated with our attendees; it prompted a practical response. Several clients approached me after the event to express their immediate need to consult with their accountants. This change in MDR has significant financial implications, and it was evident that our clients are keen to understand how these will impact their investment strategies specifically,” Angela noted.

What tips or advice would you offer to our readers who are navigating these changes?

“First, it is crucial to review your investment strategy and consult with financial advisors to understand the full implications of the MDR changes on your investments. Structuring purchases to ensure they are not classified as linked transactions could be beneficial. Also, keep abreast of any potential legislative adjustments or relief options that may arise as the market adapts to these changes,” advised Angela.

Property Market Panel

For further insights from this enlightening panel discussion, including an in-depth analysis of market dynamics, regulatory changes, and more, be sure to explore our other featured articles. Dive deeper into the expertise shared by our panelists.