Today’s Budget contains details of a new SDLT relief which will benefit purchasers of residential property who acquire more than one dwelling. The relief will be introduced in Finance Bill 2011 with effect from Royal Assent.
Where this relief is claimed the rate of SDLT will be determined by the mean consideration for the dwellings (i.e. the consideration for each dwelling will be aggregated, divided by the number of dwellings and then this figure used to determine which rate of SDLT will be applicable to the whole transaction).
In most cases, particularly where a large number of dwellings are acquired, this new relief will result in a significant SDLT saving, as under the existing rules the SDLT rate is determined by the total consideration for all the dwellings. This follows the relief’s stated aim of strengthening demand for and reducing a barrier to the investment in residential property.
The relief cannot be used to reduce the SDLT rate below 1%. There is however no upper limit on the number of dwellings which may be included in a transaction and so the relief will override the existing rule that the acquisition of six or more dwellings is treated as the acquisition of non-residential property.
Interestingly, the previous Labour Government had consulted on introducing this relief in March 2010 and the current Coalition Government had ruled out taking any further action when it responded to the consultation in September 2010 on the basis such a change would be likely to carry a significant cost to the Exchequer at a time when deficit reduction was the Government’s main priority.