MDR was originally introduced in 2011 to reduce the potential barriers, and encourage investment into the residential rental market.

How does MDR work?

In a usual property transaction, the buyer pays the SDLT on every property individually. It is usually a percentage calculated based on the price of the property.

MDR provides some tax relief where all the properties are bought at the same time/part of the same transaction.

HMRC stipulates that to work out the rate of tax to be paid:

1. Add up all the values of all the properties bought, and divide them by the number of properties.
2. Work out the tax due on this figure.
3. Multiply this amount of tax by the number of properties.

An example would be:

Company A - buys 5 properties at once, for £200,000 each. This is a total of £1million for all 5. The usual SDLT to be paid here would be £71,250 as 10% SDTL would be applied to the top segment of the £1million.

With MDR, the 5 properties would be considered to have been bought separately, and so the £1million would be divided by 5 to give £200,000 each. With this relief, the top segment of SDLT payable would only be 5%, and not 10%. This would mean that the total SDLT to be paid with MDR is only £30,000. Company A would save £41,250 with MDR.

How does this affect home sellers?

Investors and landlords are now scrambling to buy properties as quickly as possible before 1 June 2024, so that they can take advantage of the SDLT relief. The only way for them to still purchase properties and have the legal conveyancing process finished before 1 June 2024 is through auction.

Investors know that they are able to complete on, and receive keys to the property within 28 days of winning the property on auction.

This means that now is the best and latest time to put your property on auction, to ensure it is sold fast and completed on in 28 days, so the buyers can take advantage of this relief.

Investors and landlords are now less picky about the condition of the properties, as they want to buy the properties quickly. They are prepared to invest the money, do the necessary renovations and turn it into a profitable business for them.

Next steps

If you wanted to read up more on how to sell your property by way of modern online auction, check out our process to sell here. If you are unsure whether to go through auction, check out our is auction right for you page.

If you want to take advantage of the investors and landlords buying up all properties fast now before 1 June 2024, get in touch with one of our property experts below, who will be able to guide you through our process.