Stamp duty relief for a block of flats: when long leases do not count
In short
For historic multiple dwellings relief, buying a freehold block did not always mean every flat counted. Flats already held on long leases were normally excluded from the count.
- Check whether the transaction completed or was substantially performed before 1 June 2024.
- Read each flat lease and check its initial term.
- Consider the special shared ownership exception where relevant.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty relief for a block of flats: when long leases do not count
Stamp duty relief for a block of flats: when long leases do not count
If you bought the freehold of a block of flats, historic stamp duty relief may not have counted every flat. A flat already let on a long lease could be excluded. That small detail could determine whether multiple dwellings relief was available at all.
What this rule is about
Multiple dwellings relief was a former SDLT relief that applied when a buyer acquired more than one home in a transaction, subject to the relevant conditions. Buyers could use it to calculate stamp duty differently. The government has now abolished the relief for most later transactions.
HMRC’s manual gives 1 June 2024 as the cut-off. It applies when a transaction completed, or was substantially performed, on or after that date. Linked purchases can make special transitional rules relevant.
This page focuses on the older rule, which mainly matters where a purchase was before that cut-off or where transitional rules may bring it within scope. Later transactions are usually outside it.
What the official source says
The old law regarded a freehold or headlease above flats as an interest in those flats. As a result, where a buyer acquired the freehold or a headlease over an entire block, the transaction could initially appear to involve several homes. Appearances could mislead.
There was an important limit: the test ignored the superior interest above a flat where that flat was subject to a lease first granted for more than 21 years. A superior interest usually means the freehold or a lease above another lease.
- A freehold of four empty flats could count as an interest in four homes.
- A headlease over flats could also count, depending on the leases below it.
- Under the old rule, the test normally ignored a flat where the flat was subject to a lease first granted for more than 21 years.
- The test concerned the lease’s initial term, not simply how many years remained.
- If, after applying this test to every flat and excluding superior interests above long leases, fewer than two flats remained, the purchase was not a relevant transaction for this relief.
- A separate exception existed for certain shared ownership sale and leaseback arrangements.
What this means in practice
Buying a freehold block may seem to mean that you are buying every flat, yet the historic relief test could exclude flats already held on long leases from the count. It did not automatically include them. Long leases could remove flats from the count.
The key question is therefore not only, “How many flats are in the building?” Ask instead: “How many flats count after looking at the leases?”
- Get the lease for each flat, not just a list of tenants.
- Check the original term of each lease when it was granted.
- Separate flats on long leases from empty flats and short-let flats.
- Check whether another property purchase was linked to the purchase.
- Do not treat HMRC’s manual as a replacement for the legislation.
How to analyse it
Start with timing. The government abolished the relief for most transactions on or after 1 June 2024. Completion is usually the effective date, but substantial performance can make the date earlier.
For a transaction to which the old rules or transitional rules may apply, consider the property interests one by one.
- Find the completion date.
- Check whether possession was taken or most of the price was paid earlier.
- Identify what you bought: freehold, headlease, or another interest.
- List every flat within that interest.
- Read the lease for each flat and record its initial term.
- Leave out a superior interest above any lease first granted for more than 21 years.
- Count the flats still included.
- Check whether linked transactions add another home to the picture.
- If shared ownership is involved, test each condition of the special exception.
Example
Sam buys the freehold of a block containing four flats. Two flats are empty. The other two are held under leases that were each first granted for 99 years. Under the old rule, the test ignores Sam’s freehold interest above the two 99-year leases. Only the two empty flats count, so the purchase is a relevant transaction involving two homes.
Change one fact. If three of the four flats are on 99-year leases, only one flat remains in the count. On the facts in HMRC’s example, that purchase is not a relevant transaction for the former relief.
Why this can be difficult in practice
The records can mislead. An estate agent may describe every flat as “tenanted”, but that does not answer the legal question. The lease, and particularly its original length, is what matters.
The date can also be decisive. A contract may have been substantially performed before formal completion. That may affect whether the abolition date or transitional rules apply.
- A current tenant does not necessarily have a long lease.
- A long lease does not stop the freehold being valuable; it changes this specific historic count.
- The remaining years on the lease may not be the relevant figure.
- Linked purchases may need separate transitional analysis.
- The shared ownership exception is narrow and depends on all its conditions.
- HMRC’s manual states its view, but legislation takes priority if the two differ.
Key takeaways
- Historic multiple dwellings relief has been abolished for most transactions from 1 June 2024.
- Under the old rule, the test normally ignored a flat where the flat was subject to a lease first granted for more than 21 years.
- Check the original lease terms, the transaction date and any transitional rules.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 6B para 2 — when a transaction involved two or more homes; long leases exclude a superior interest from counting; shared ownership sale and leaseback exception
- FA 2003 section 57A — exemption for qualifying sale and leaseback arrangements
- FA 2003 Schedule 9 para 5 — bodies that qualify for shared ownership rules
- FA 2003 section 44 — when a contract is substantially performed
- FA 2003 section 119 — the effective date of a land transaction
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The supplied HMRC page refers readers to separate transitional guidance for linked transactions. This page does not set out those rules.
- The supplied consolidated statutory text retains the historical Schedule 6B wording while HMRC says the relief was abolished from 1 June 2024. The current legislation and transitional provisions should be checked before publication or reliance.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- the completion date and any earlier substantial performance date
- the freehold, headlease and each flat lease
- the original term of every lease over a flat
- details of any linked property transactions
- documents showing whether a shared ownership sale and leaseback applies
- evidence that the seller was a qualifying body where that exception is claimed
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty relief for a block of flats: when long leases do not count [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 6B para 2 - when a transaction involved two or more homes https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/2/2025-11-17 - FA 2003 Schedule 6B para 2 - long leases exclude a superior interest from counting https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/2/2025-11-17 - FA 2003 Schedule 6B para 2 - shared ownership sale and leaseback exception https://www.legislation.gov.uk/ukpga/2003/14/schedule/6B/paragraph/2/2025-11-17 - FA 2003 section 57A - exemption for qualifying sale and leaseback arrangements https://www.legislation.gov.uk/ukpga/2003/14/section/57A/2025-11-17 - FA 2003 Schedule 9 para 5 - bodies that qualify for shared ownership rules https://www.legislation.gov.uk/ukpga/2003/14/schedule/9/paragraph/5/2025-11-17 - FA 2003 section 44 - when a contract is substantially performed https://www.legislation.gov.uk/ukpga/2003/14/section/44/2025-11-17 - FA 2003 section 119 - the effective date of a land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/119/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm29930 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The supplied HMRC page refers readers to separate transitional guidance for linked transactions. This page does not set out those rules. - The supplied consolidated statutory text retains the historical Schedule 6B wording while HMRC says the relief was abolished from 1 June 2024. The current legislation and transitional provisions should be checked before publication or reliance. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty relief for a block of flats: when long leases do not count
Search Land Tax Advice with Google
