I’m aware that multiple dwellings relief (MDR) continues to be available under Land Transaction tax (LTT) in Wales, but that a change to the legislation in February 2025 may restrict relief in such cases involving “subsidiary” dwellings purchased with another main dwelling. Can you please clarify whether the relief can be claimed in my client’s case based on the foregoing? The values of the respective properties have been given as follows:”
Overall purchase price £1.3m
Main house £900,000
Cottages £200,000 each.
Multiple dwellings relief (MDR) continues to be available in respect of land transactions in Wales despite its withdrawal under stamp duty land tax (SDLT) from 1 June 2024.
However, the relief ceases to be available for transactions on or after 7 February 2025 which are not liable to the “higher-rates residential-property transactions” as a result of the “subsidiary dwellings exception”.
These provisions remove the higher residential rates where a residential property is acquired with one or more separate dwellings within the same grounds or building, and where the value of the main dwelling accounts for at least 2/3rds of the consideration for the whole transaction on a just and reasonable basis. If the conditions are met the acquisition is effectively regarded as a single dwelling for the additional rate purposes, potentially applying the lower residential rates of LTT where the purchaser either owns no other residential property, or where the main dwelling is acquired as a replacement for the owner’s home.
MDR has previously been available for such transactions despite the application of the subsidiary dwelling rule, which operates purely in the context of the application of the higher rates for dwellings. It had therefore been possible to benefit from both the subsidiary dwelling rule and MDR before the current rule change.
It is important to remember that the higher rates for dwellings will still apply despite the above “subsidiary dwelling” rules where, for example, the purchaser does own another separate dwelling or dwellings in addition to the purchase in question and this is not acquired as a replacement home.
In your client’s case, the purchase does meet the requirements of the subsidiary dwelling exception as the main house accounts for more-than 2/3rds of the consideration for the transaction. MDR is therefore potentially available if the higher residential rates of LTT would still apply, i.e. if your client owns any other dwelling beyond the current acquisition, anywhere in the world (with a value of at least £40,000 and not subject to a lease with more than 21 years to run (para 5(1) LTT(Wales)2017)).
In conclusion: assuming your client is liable to pay the higher residential LTT rates on the purchase in question based on the above, then MDR may still be claimed despite the changes to the legislation from February 2025.
