Read the original guidance here:
HMRC SDLT: Relief for Multiple Dwellings: Student Accommodation and MDR Changes from June 2024

SDLTM29957 – Relief for Transfers Involving Multiple Dwellings: Treatment of Student Accommodation

Understanding Key Concepts

When we talk about relief for transfers involving multiple dwellings, we are specifically addressing situations where properties are transferred that consist of more than one dwelling. This can include blocks of flats or developments with multiple homes.

Student accommodation often falls under this category. The relief allows certain buyers to benefit from lower stamp duty if they are purchasing properties specifically as student housing.

The Abolition of MDR

From 1 June 2024, the Minimum Duty Rate (MDR) will no longer be applicable for transactions that either complete or significantly perform on or after this date. There are special transitional rules connected to this change, which are outlined in detail at SDLTM29902.

It’s important to note that if a transaction is part of a series of linked agreements, you may need to reference additional guidance available at SDLTM29903.

This information was last significantly updated on 30 March 2020, so it’s essential to check for the latest details.

Relief for Student Accommodation Transfers

Relief for student accommodation is primarily aimed at situations where a person or group is buying property intended to be used for student housing. The relief can be valuable as it reduces the amount of stamp duty that you would typically pay.

Here are key points regarding this relief:

– Eligibility: The property must be specifically set up or intended for student use. This means it should be suitable for students, with the necessary amenities and features.

– Multiple Dwellings Relief (MDR): If you are purchasing multiple properties, such as a block of student flats, MDR allows you to aggregate the purchase price of all the dwellings. This often results in a lower overall stamp duty bill.

– Conditions for Relief: To qualify for the relief, the buyer must demonstrate that the property is predominantly for student accommodation. It cannot simply be any type of residential property purchased in bulk.

How Relief is Calculated

When applying for relief on student accommodation, the way stamp duty is calculated can be somewhat different compared to ordinary property transactions. Here’s how the process typically works:

1. Determine the Total Value: First, you need to calculate the combined value of all the properties being purchased. This is essential as the relief applies to this total amount.

2. Work Out the Average Value: You then divide the total value by the number of dwellings. This average value is crucial in determining how relief is applied. The higher the average value, generally, the more relief you can claim.

3. Apply the Relevant Rates: Finally, apply the reduced rates relevant for multiple dwellings as the stamp duty thresholds differ from standard transactions.

Example Scenario

Let’s illustrate this with an example:

Imagine a buyer is purchasing a block of five flats intended for student accommodation. The total purchase price for the block is £1,000,000.

– Step 1: The average value per flat would be £1,000,000 / 5 = £200,000.
– Step 2: You would then apply the reduced stamp duty rates for multiple dwellings to this average value.
– Step 3: This results in a lower total stamp duty than if the properties were assessed individually.

Special Provisions and Rules

It is important to be aware of several special provisions when applying for relief for student accommodation:

– Linked Transactions: If the purchase consists of several properties that are connected, the relief calculations may be affected. You should review the guidelines on linked transactions to ensure compliance.

– Documentation Required: You will need to submit appropriate documentation to prove that the properties are intended for student use. This might include tenancy agreements, planning permissions, or contracts to show that these properties will serve the student market.

– Changes Post-Acquisition: Buyers should be aware that if they change the use of the property after the purchase, they may face penalties or additional stamp duty obligations. For example, if the accommodation switches from student housing to general residential use, previously claimed relief could be affected.

Review Process

If you are unsure about how the relief applies to your situation, you can always seek guidance:

– Speak to a Professional: Consulting with a tax professional or solicitor who specializes in property can provide clarity and ensure that you are correctly navigating the relief process.

– Contact HMRC: You can directly reach out to HMRC for clarification on any aspect of the relief mechanism. They have resources and personnel who can explain how relief applies according to individual circumstances.

Final Thoughts on Relief and Application

Navigating the complexities of stamp duty and relief for student accommodation can seem challenging, but understanding the process and requirements helps simplify it.

It’s vital to gather all necessary information and stay updated on any rules or changes that may impact your purchase. This ensures you make informed decisions that could potentially save you significant amounts in stamp duty.

For further guidance, refer to the specific detailed instructions in the HMRC resources and remember that every purchase scenario can vary. Do your research, keep necessary documentation ready, and consult where needed to achieve the best outcome for your property investment.