For a Harrow property investor, SDLT is typically the second-largest cost on the day after the deposit. A £600,000 second home attracts £33,500 of SDLT (£15,500 standard plus £18,000 surcharge). The reliefs and the rate-band structure carry significant planning value, particularly for portfolio buyers and mixed-use acquisitions.
The October 2024 Budget raised the additional-dwelling surcharge from 3% to 5%, the 2024 Spring Budget reformed Multiple Dwellings Relief, and HMRC has ramped up enforcement on the uninhabitable-property and mixed-use boundary.
2026 SDLT rates and bands
SDLT rates for residential property (post-October 2024)
| Band | Standard rate | Additional dwelling rate | Non-resident surcharge |
|---|---|---|---|
| Up to £125,000 | 0% | 5% | +2% |
| £125,001-£250,000 | 2% | 7% | +2% |
| £250,001-£925,000 | 5% | 10% | +2% |
| £925,001-£1.5m | 10% | 15% | +2% |
| Over £1.5m | 12% | 17% | +2% |
Multiple Dwellings Relief post-2024
MDR was significantly tightened from 1 June 2024:
- MDR was abolished in its previous form for transactions from 1 June 2024, except for genuine multiple-dwelling acquisitions of six or more properties.
- Six-or-more transactions can still elect non-residential treatment (a meaningful saving).
- Annexes, granny flats and "two-property" claims (which had been a popular MDR tool) are largely closed off.
- Transitional provisions apply to contracts exchanged before 1 June 2024.
HMRC has retroactively challenged MDR claims
Pre-2024 MDR claims involving annexes have been the subject of HMRC enquiry and claim withdrawal. Where MDR has been claimed in the last four years on borderline grounds, expect scrutiny.
Mixed-use properties and commercial rates
Where a property has a meaningful non-residential element, commercial SDLT rates can apply to the whole transaction:
Non-residential and mixed-use SDLT (apportioned)
| Band | Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001-£250,000 | 2% |
| Over £250,000 | 5% |
For a £750,000 mixed-use property, mixed-use SDLT is approximately £29,500 vs £40,000+ residential plus surcharges. The "meaningful commercial element" test has tightened: HMRC scrutinises pure-cosmetic commercial framing.
The 2% non-UK-resident surcharge
Buyers who have not been UK-resident for 183+ days in the 12 months before completion pay an additional 2% on every band:
- The test is the buyer's residence in the 12 months before completion, not citizenship or domicile.
- Joint buyers are tested individually; if any joint buyer is non-resident, the surcharge applies to the whole transaction.
- Companies (UK or foreign) controlled by non-residents are tested.
- A reclaim is available where the buyer becomes UK-resident in the year following completion.
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Equity transfer between spouses
Inter-spouse transfers typically qualify for the connected-persons SDLT exemption where there is no chargeable consideration:
- A gift of beneficial ownership between spouses with no consideration: zero SDLT.
- A transfer where the receiving spouse takes on a portion of the mortgage: SDLT applies on the assumed mortgage debt as consideration.
- For a £400,000 property with a £250,000 mortgage where 50% transfers, the assumed debt is £125,000 and is the SDLT consideration.
Reclaiming the 5% surcharge
Where a buyer pays the additional-dwelling surcharge on a replacement main residence purchase, the surcharge is recoverable if the previous main residence is sold within 3 years of completion:
- 1On purchase of the new main residence, pay the surcharge upfront.
- 2Sell the previous main residence within 3 years.
- 3Apply for refund within 12 months of selling the previous main residence.
- 4HMRC processes the refund within 6-12 weeks; interest is added.
Buying derelict or uninhabitable properties
A property genuinely uninhabitable at completion may qualify for non-residential SDLT rates:
- The property must be incapable of being used as a dwelling at the moment of completion.
- Cosmetic disrepair (damp, peeling paint, dated kitchen) is insufficient.
- HMRC tightened guidance in 2022-2024; a building survey at completion confirming uninhabitability is critical evidence.
- Where successfully claimed, savings on a £400k Harrow renovation project can run £25,000-£35,000.
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