Example of SDLT Relief for Multiple Dwellings in Property Purchase

SDLT on Buying a Freehold Block with Both Leased and Unleased Flats

When a buyer acquires the freehold of a block of flats, Stamp Duty Land Tax may not apply in the same way to every flat. If some flats are already let on long leases and others are vacant or not long leased, multiple dwellings relief may apply only to the flats treated as dwellings acquired. The purchase price must therefore be apportioned carefully, and other SDLT rules may also need to be considered.

• HMRC’s example shows that, in a block of 10 flats, only the five untenanted flats qualified as dwellings acquired for multiple dwellings relief purposes.
• The total price must be split between the untenanted flats and the reversionary interests in the flats already let on long leases.
• For the qualifying flats, SDLT under multiple dwellings relief is worked out by averaging the apportioned price across those dwellings and then multiplying the tax by their number.
• The flats already let on long leases are taxed separately, with the rate determined by the total chargeable consideration for the whole transaction.
• The higher rates for additional dwellings, the non-resident surcharge, and the rule allowing six or more dwellings to be treated as non-residential property may all be relevant in the same purchase.
• In practice, the main difficulties are identifying exactly what interests are being acquired and supporting a fair valuation and apportionment of the price.

Scroll down for the full analysis.

Multiple dwellings relief where a block includes both tenanted and untenanted flats

This page explains how stamp duty land tax can work when someone buys the freehold of a block of flats and some flats are already let on long leases while others are not. The point matters because multiple dwellings relief may apply only to some of the flats, and the rest may be taxed on a different basis.

What this rule is about

The source deals with a mixed freehold purchase of a block containing several flats. Some flats are already subject to long leases, and some are not. For SDLT purposes, that distinction can affect whether the purchase counts as acquiring dwellings for multiple dwellings relief.

The key issue is that the buyer is not necessarily treated as acquiring all the flats in the same way. Where a flat is already let on a long lease, the freeholder is generally not acquiring the dwelling itself in the same direct sense as with an untenanted flat. That affects how the consideration is split and how the SDLT calculation is done.

What the official source says

HMRC’s example concerns the purchase of the freehold of a block of 10 flats for £1.4 million. There is no headlease. Five flats are let on 99-year leases and five are untenanted.

HMRC says the transaction is a relevant transaction for multiple dwellings relief because it involves the acquisition of more than one dwelling, namely the five untenanted flats. The freehold is treated as if it were interests in the individual dwellings. The total price is then apportioned between:

• the five untenanted flats: £1,250,000
• the five tenanted flats: £150,000

For the five untenanted flats, the SDLT rate is determined by taking the consideration attributed to those flats and dividing it by the number of dwellings concerned. Tax is calculated on that average amount and then multiplied by five.

HMRC also states that the higher rates for additional dwellings apply, and that the non-resident rates may also apply if any purchaser is not UK resident.

For the five tenanted flats, HMRC says the rate of tax is set by the chargeable consideration for the transaction as a whole, which is £1.4 million.

Finally, because the transaction involves six or more dwellings, HMRC notes that it can be treated as involving non-residential property under section 116(7) Finance Act 2003.

What this means in practice

This is not a simple “one price, one SDLT calculation” case. The purchase price has to be split between different parts of the property interest being acquired.

The practical effect of HMRC’s example is:

• the buyer gets multiple dwellings relief only for the part of the transaction that relates to the five untenanted flats
• the part relating to the five flats already let on 99-year leases is dealt with separately
• the transaction may also fall within the rule that six or more dwellings can be treated as non-residential property

This shows that, in a block purchase, the existence of long leasehold interests can materially change the SDLT analysis. A buyer may think they are buying 10 dwellings, but HMRC’s example treats only the five untenanted flats as dwellings acquired for the multiple dwellings relief calculation.

The example also shows that the apportionment of the consideration is central. If the price is not split properly between the different elements of what is being bought, the SDLT calculation will not be reliable.

How to analyse it

A sensible way to approach this kind of transaction is to ask the following questions.

• What exactly is being acquired? Is it the freehold only, or are there headleases or other interests?
• How many flats are actually being acquired as dwellings for multiple dwellings relief purposes?
• Which flats are already subject to long leases, and what is the nature and length of those leases?
• How should the total price be apportioned between the different interests acquired?
• Does the higher rates for additional dwellings regime apply?
• Are any purchasers non-UK resident so that the non-resident surcharge may apply?
• Because the transaction involves six or more dwellings, is it more appropriate to treat it as non-residential under section 116(7)?

The source material does not set out a full method for valuation or apportionment. But it clearly assumes that the consideration must be allocated between the untenanted flats and the tenanted flats before the SDLT rules are applied to each part.

It is also important not to collapse different rules into one. Multiple dwellings relief, the higher rates for additional dwellings, the non-resident surcharge, and the six-or-more-dwellings rule are separate parts of the SDLT framework. More than one can matter in the same transaction.

Example

Illustration based on HMRC’s example:

A company buys the freehold of a block of 10 flats for £1.4 million. Five flats are vacant. Five are already let on 99-year leases.

The price is apportioned so that £1,250,000 relates to the five vacant flats and £150,000 relates to the reversionary freehold interests in the five leased flats.

For the five vacant flats, the buyer applies multiple dwellings relief. The SDLT rate is determined by averaging the £1,250,000 across those five dwellings, calculating tax on that average figure, and multiplying by five.

For the five leased flats, HMRC’s example says the rate of tax is set by the total chargeable consideration for the whole transaction, £1.4 million.

The higher rates for additional dwellings apply. If a purchaser is non-UK resident, the non-resident rates may also need to be considered. Because the transaction involves six or more dwellings, the buyer must also consider whether the non-residential treatment rule in section 116(7) is available and how that interacts with the rest of the calculation.

Why this can be difficult in practice

The hardest part is often identifying what has really been acquired. A freehold of a block is a single legal estate, but SDLT may require a more detailed analysis of the underlying interests.

Apportionment can also be contentious. The source gives figures, but does not explain how they were reached. In real transactions, the valuation of the freehold reversion relating to long-leased flats may require careful evidence.

Another difficulty is that several SDLT rules may point in different directions. A transaction involving six or more dwellings can potentially be treated as non-residential property, but the source also discusses multiple dwellings relief and the higher rates for additional dwellings. Working out which route produces the correct result depends on the structure of the transaction and the legislation as a whole, not just on this example in isolation.

Finally, readers should be careful not to assume that every flat in a block automatically counts as a dwelling acquired for multiple dwellings relief. HMRC’s example shows that this is not always the case where long leases already exist.

Key takeaways

• When a freehold block purchase includes both vacant flats and flats already let on long leases, SDLT may treat those parts differently.
• Multiple dwellings relief may apply only to the flats treated as dwellings acquired in the transaction, so apportioning the price correctly is essential.
• In the same transaction, you may also need to consider the higher rates for additional dwellings, the non-resident surcharge, and the six-or-more-dwellings non-residential rule.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example of SDLT Relief for Multiple Dwellings in Property Purchase

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