Relief for transfers involving multiple dwellings: Example 2
The freehold of a block of 10 flats is purchased for £1.4 million. There is no headlease but five flats are let on 99-year leases.
The transaction is a relevant transaction for the purposes of the relief as it involves the acquisition of more than one dwelling - i.e. the five untenanted flats. The freehold is treated as if it were interests in the individual dwellings. The chargeable consideration is apportioned between the five untenanted flats (£1,250,000) and the five tenanted flats (£150,000).
The rate of tax on the consideration attributed to the untenanted flats is set by the amount of that consideration divided by the number of dwellings concerned. This is £250,000 so the rate of tax is 1%. The tax due in respect of these flats is therefore 1% of £1,250,000 = £12,500.
The rate of tax on the consideration attributed to the tenanted flats is set by the chargeable consideration for the transaction (£1.4 million). As the transaction involves six or more dwellings, it is treated as involving non-residential property so the rate of tax is 4%. The tax due in respect of these flats is therefore 4% of £150,000 = £6,000.
The total tax due on the transaction is therefore £12,500+£6,000 = £18,500.