Changes to LTT multiple dwellings relief in Wales
LTT multiple dwellings relief is no longer available for individuals purchasing properties in Wales with subsidiary dwellings
LTT multiple dwellings relief no longer available for subsidiary dwellings in Wales
Multiple dwellings relief (MDR) from Stamp Duty Land Tax for residential properties in England and Northern Ireland was abolished from 1 June 2024. Following a Welsh Revenue Authority (WRA) consultation on the future of MDR in Wales, the decision has been made to retain MDR in Land Transaction Tax (LTT) but restrict its application - with effect from 7 February 2025 individuals purchasing a dwelling with one or more ‘subsidiary dwellings’ will not be able to claim MDR if they are paying LTT at the main ‘homebuyer’ rates. The Land Transaction Tax (Modification of Relief for Acquisitions Involving Multiple Dwellings) (Wales) Regulations 2025 were published to bring this into effect.
MDR is a partial relief that allows the taxpayer to pay LTT at the effective rate that would be payable had they bought a single property for the average price paid for all the properties, thus pushing the total chargeable consideration into lower LTT bands.
A subsidiary dwelling is a dwelling contained in the principal dwelling (such as a self-contained flat) or in the garden or grounds of the principal dwelling and where the value of the principal dwelling is two thirds or more of the total value of all the dwellings purchased. Subsidiary dwellings are not considered to be ‘second homes’ but treated as part of the principal dwelling when determining whether or not the higher rate surcharge applies (the ‘second homes rate’).
Prior to the amendment to the rules, it was possible to claim MDR on purchases of multiple dwellings that benefitted from the main homebuyer rates of LTT that apply where an individual is buying his first home or replacing his main residence. The new rules continue to treat the purchase as one of a single dwelling for the purposes of establishing whether the main homebuyer rates or second homes rates apply but now for MDR purposes, if subject to the main homebuyer rates, it is also treated as one dwelling and hence cannot benefit from MDR.
The reason for amending the rules rather than abolishing them was broadly that MDR had some benefit in promoting investment in residential property and housing supply, but not in the case of individuals purchasing main residences with subsidiary dwellings. The WRA notes that the amendment should also reduce its compliance work arising from spurious claims that home purchases include more than one dwelling.
