Is SDLT linked when buying a freehold with four flats in one auction lot?

Introduction

Buyers often ask how Stamp Duty Land Tax (SDLT) works where a building contains several flats, each held under separate titles or leases, and the freehold is also being acquired as part of the same deal. The SDLT position can become more complicated if the purchase is made at auction, if different sellers are involved, or if the buyer is considering whether the property might qualify for non-residential or mixed-use rates.

This article explains the likely SDLT treatment where a purchaser acquires a freehold building comprising four flats for a single overall price, and looks at whether the transaction is linked, whether mixed-use treatment may be available, and why arguments based on a property being uninhabitable are now much harder to sustain.

The Question

A buyer is considering purchasing a freehold property for around £3.3 million. The building contains four flats with separate titles or leases, and the freehold is included in the purchase. The flats are connected with family ownership on the seller side, and the property is being sold together as one auction lot.

The buyer wants to know:

• whether the acquisition should be treated as linked transactions for SDLT;
• what the likely SDLT liability would be; and
• whether there is any realistic scope to claim mixed-use or non-residential SDLT rates.

Nick’s Explanation

Nick’s view was that, on the facts described, the arrangement sounded like a linked transaction. He also noted that, at this price level, it is important to review the full facts carefully before filing the SDLT return, because the tax difference between residential rates and non-residential rates can be substantial.

He explained that if the purchase could genuinely be treated as mixed-use, the SDLT could be much lower than under standard residential treatment. However, after reviewing the sales particulars, his view was that it seemed unlikely the property could properly be classified as non-residential on the basis of a mixed-use element.

He also said that it was unlikely the buyer could argue that the property was “not suitable for use as a dwelling” so as to bring the purchase within non-residential rates. That is an important point, because this area has become significantly stricter following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, which confirms that the threshold for showing a dwelling is not suitable for use is now relatively high.

Nick further indicated that if the buyer was purchasing through a limited company, the SDLT charge could be higher still. On a price of £3.3 million, he estimated SDLT of at least £406,250 in that company purchase scenario.

The Law

SDLT is charged under the Finance Act 2003. The amount payable depends on the nature of the property, the purchaser, and whether multiple transactions must be treated together.

The main provisions relevant here are:

• Finance Act 2003, section 43, which deals with the charge to SDLT;
• Finance Act 2003, section 55, which sets the rate structure for land transactions;
• Finance Act 2003, section 108, which defines residential property;
• Finance Act 2003, section 116, which contains the rules on linked transactions; and
• Schedule 4ZA to the Finance Act 2003, which imposes the higher rates for additional dwellings in relevant cases.

A transaction is generally “linked” if there is more than one land transaction between the same buyer and seller, or between connected persons, and the transactions form part of a single scheme, arrangement or series of transactions. Where transactions are linked, SDLT is usually calculated by reference to the aggregate consideration.

Residential rates normally apply where the subject matter consists entirely of residential property. Non-residential or mixed-use rates apply where the property is not wholly residential, for example where part of the land is genuinely non-residential.

A property will not fall outside residential treatment merely because it needs repair or modernisation. The courts have made clear that the test for whether a building is “suitable for use as a dwelling” is not easily failed. In particular, Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799 confirms that the condition thresholds are now relatively high in uninhabitable or not suitable for use cases.

Analysis

The SDLT analysis in a case like this usually involves four steps.

First, identify exactly what is being bought. If the buyer acquires four flats and the freehold reversion as part of one overall arrangement, SDLT looks at the legal and practical substance of the deal. Even if there are separate titles, the question is whether there are multiple transactions forming part of one scheme or arrangement.

Secondly, consider whether the transactions are linked. If the buyer is acquiring the interests together, from related sellers or as one coordinated disposal, there is a strong possibility that the linked transaction rules in section 116 will apply. Where linked transactions apply, the consideration is aggregated to determine the SDLT rate bands. On the facts described, linked treatment appears likely.

Thirdly, decide whether the property is wholly residential or mixed-use. A building containing flats will usually be residential property. The fact that one part may previously have been used as an HMO, or that the ownership structure is unusual, does not by itself make the transaction mixed-use. There needs to be a real non-residential element at the effective date of the transaction, or land that is not part of the residential property for SDLT purposes.

Fourthly, consider whether any argument exists that one or more units are not suitable for use as dwellings. This is where some buyers hope to access non-residential rates. But that argument is now much more difficult. Following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, the courts have confirmed that the condition thresholds are relatively high. Serious disrepair, missing facilities, or a need for refurbishment will not automatically take a property outside residential treatment. The question is not whether the property is attractive, modern, or immediately convenient to occupy, but whether it remains suitable for use as a dwelling in the relevant legal sense.

On the facts described here, the safer view is that the property is residential and that the linked transaction rules are likely to apply. If the buyer is an individual and no higher-rate surcharge applies, the SDLT would be calculated on the aggregated residential consideration. If the buyer is a company, the higher rates for additional dwellings commonly apply, subject to the detailed statutory rules, which can increase the SDLT materially.

Using the figures mentioned in the correspondence:

• if the purchase were genuinely mixed-use and taxed at non-residential rates, SDLT on £3.3 million would be £154,500;
• if the purchase were residential and linked, SDLT was estimated at £307,250 in the scenario discussed; and
• if the buyer were a limited company and the higher residential rates applied, SDLT was estimated at at least £406,250.

Those figures depend on the applicable rates in force for the effective date of the transaction and the purchaser’s status, but they illustrate the scale of the issue.

Outcome

In a case where a buyer acquires four flats and the freehold together as one auction lot for about £3.3 million, the likely SDLT position is that the transactions are linked and that residential rates apply.

On the facts described, mixed-use treatment appears unlikely. An argument that the property is not suitable for use as a dwelling also appears weak, especially given the stricter approach confirmed in Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

If the purchase is being made through a limited company, the SDLT charge may be higher again because the higher residential rates may apply.

Practical Steps

Before exchange or completion, a buyer in this position should:

• obtain and review the title documents for each flat and the freehold;
• confirm whether there are separate contracts, one contract, or a single auction lot with coordinated completion;
• check whether the sellers are connected or acting together under one arrangement;
• review the actual physical condition of each unit at the effective date of the transaction;
• identify whether any part of the property is genuinely non-residential in SDLT terms;
• confirm whether the purchaser is an individual, a company, or acting with other buyers; and
• calculate SDLT using the correct rates for the completion date, including any higher-rate surcharge where applicable.

Where a buyer is considering a mixed-use or uninhabitable argument, that should be tested carefully against the legislation and current case law before any SDLT return is filed.

Conclusion

Buying a freehold building with four flats in one deal will often trigger the linked transaction rules for SDLT. In the scenario described, the more likely outcome is residential SDLT on the aggregated price, not mixed-use treatment. Arguments based on disrepair or lack of habitability now face a high threshold after Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Legal References Used

• Finance Act 2003, section 43
• Finance Act 2003, section 55
• Finance Act 2003, section 108
• Finance Act 2003, section 116
• Finance Act 2003, Schedule 4ZA
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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