{"id":28651,"date":"2026-05-11T06:15:50","date_gmt":"2026-05-11T05:15:50","guid":{"rendered":"https:\/\/www.benhams.com\/news\/?p=28651"},"modified":"2026-05-11T08:20:03","modified_gmt":"2026-05-11T07:20:03","slug":"how-portfolio-investors-can-qualify-for-non-residential-sdlt","status":"publish","type":"post","link":"https:\/\/www.benhams.com\/news\/property-advice\/how-portfolio-investors-can-qualify-for-non-residential-sdlt\/","title":{"rendered":"The \u2018six or more\u2019 rule – How portfolio investors can qualify for non-residential SDLT"},"content":{"rendered":"

Ever since the discontinuation of the Multiple Dwellings Relief in June 2024, property and portfolio investors in the UK have been seeking alternative ways to save on the high rates of residential stamp duty land tax (SDLT). The \u2018six or more\u2019 dwellings rule helps qualify for non-residential SDLT.<\/p>\n

Residential SDLT rates in the UK apply to the purchase of all homes, with buyers paying a tax to HMRC that varies based on the property\u2019s value and whether it is the buyer’s primary or secondary home. To support property investment, which plays an important role in maintaining a steady supply of rental stock, the government had previously introduced a relief measure for the purchase of more than two dwellings, known as the Multiple Dwellings Relief (MDR).<\/p>\n

However, after careful review of MDR<\/a>, it was realised that the relief hadn\u2019t had much impact on property investments and that the government was only losing revenue. To cut its losses, MDR was suspended, leaving investors with the \u2018six or more\u2019 rule, under which they must purchase six or more dwellings in a single transaction to take advantage of lower non-residential SDLT rates. This rule applies to individual and overseas investors as well as corporates buying properties in the UK.<\/p>\n

Read more about SDLT and the other often overlooked costs of buying a London property<\/a>.<\/p>\n

What is the SDLT \u2018six or more\u2019 rule?<\/h2>\n

\"Stamp<\/p>\n

According to Section 116(7) of the Finance Act 2003, which is also referred to as the six-or-more-dwellings rule, buying six or more dwellings in a single transaction is treated as a non-residential purchase for SDLT purposes.<\/p>\n

What does this actually mean?<\/h2>\n

This means that investors making such a bulk property investment can pay a lower non-residential SDLT rate rather than the significantly higher residential SDLT rate. Since HMRC views such transactions as having a commercial rationale, they are taxed differently from conventional single- or additional-home purchases.<\/p>\n

Why does this rule matter more after June 2024?<\/h2>\n

Before being revoked in June 2024, MDR was a widely used discount applicable to purchasers of blocks of flats or properties. SDLT was calculated not on the consolidated transaction value but on the average price per dwelling. While this allowed investors to save SDLT on higher-value properties by averaging them with lower-valued homes, it also created loopholes. Especially, when buying larger properties with annexes or granny flats, as they could be classified as individual dwellings for MDR purposes.<\/p>\n

With MDR gone, investors began looking for other ways to optimise their tax bills, and the six-or-more rule for qualifying for non-residential discounts has become a legitimate strategy for portfolio investors.<\/p>\n

Residential vs non-residential SDLT rates<\/h2>\n\n\n\n\n\n\n\n\n\n\n
Band<\/th>\nResidential (Standard)<\/th>\nResidential (Additional Dwelling)<\/th>\nNon-Residential<\/th>\n<\/tr>\n<\/thead>\n
Up to \u00a3125,000<\/td>\n0%<\/td>\n5%<\/td>\n0%<\/td>\n<\/tr>\n
\u00a3125,001 \u2013 \u00a3150,000<\/td>\n2%<\/td>\n7%<\/td>\n0%<\/td>\n<\/tr>\n
\u00a3150,001 \u2013 \u00a3250,000<\/td>\n2%<\/td>\n7%<\/td>\n2%<\/td>\n<\/tr>\n
\u00a3250,001 \u2013 \u00a3925,000<\/td>\n5%<\/td>\n10%<\/td>\n5%<\/td>\n<\/tr>\n
\u00a3925,001 \u2013 \u00a31.5m<\/td>\n10%<\/td>\n15%<\/td>\n5%<\/td>\n<\/tr>\n
Over \u00a31.5m<\/td>\n12%<\/td>\n17%<\/td>\n5%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

As per current SDLT rates<\/a> (as of April 2025), residential rates can go up to 12% for standard purchases and up to 17% for second or additional homes. Also, for non-resident buyers, there is an additional 2% surcharge on top of the existing rate.<\/p>\n

Read more on how SDLT rates have changed since April 2025<\/a>.<\/p>\n

Example – Portfolio purchase of \u00a33 million<\/h2>\n

Let\u2019s take an example of a portfolio investor buying six flats in London, each valued at \u00a3500,000, for a total purchase value of \u00a33 million.<\/p>\n

SDLT rates on this purchase could be applied in three different ways:<\/p>\n

Scenario 1: Buying six dwellings individually (Additional Dwelling Rate)<\/h2>\n\n\n\n\n\n\n\n\n
Band<\/th>\nResidential (Additional Dwelling)<\/th>\nTax<\/th>\n<\/tr>\n<\/thead>\n
Up to \u00a3125,000<\/td>\n5%<\/td>\n\u00a36,250<\/td>\n<\/tr>\n
\u00a3125,001 \u2013 \u00a3150,000<\/td>\n7%<\/td>\n\u00a31,750<\/td>\n<\/tr>\n
\u00a3150,001 \u2013 \u00a3250,000<\/td>\n7%<\/td>\n\u00a37,000<\/td>\n<\/tr>\n
\u00a3250,001 \u2013 \u00a3500,000<\/td>\n10%<\/td>\n\u00a325,00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

In this scenario, the total SDLT on each dwelling would work up to \u00a340,000. This means for six dwellings the total SDLT is \u00a3240,000, with an effective rate of 8%<\/p>\n

Scenario 2: Buying six dwellings as one transaction (Additional Dwelling Rate)<\/h2>\n\n\n\n\n\n\n\n\n\n\n
Band<\/th>\nResidential (Additional Dwelling)<\/th>\nTax<\/th>\n<\/tr>\n<\/thead>\n
Up to \u00a3125,000<\/td>\n5%<\/td>\n\u00a36,250<\/td>\n<\/tr>\n
\u00a3125,001 \u2013 \u00a3150,000<\/td>\n7%<\/td>\n\u00a31,750<\/td>\n<\/tr>\n
\u00a3150,001 \u2013 \u00a3250,000<\/td>\n7%<\/td>\n\u00a37,000<\/td>\n<\/tr>\n
\u00a3250,001 \u2013 \u00a3925,000<\/td>\n10%<\/td>\n\u00a367,500<\/td>\n<\/tr>\n
\u00a3925,001 \u2013 \u00a31.5m<\/td>\n15%<\/td>\n\u00a386,250<\/td>\n<\/tr>\n
Over \u00a31.5m<\/td>\n17%<\/td>\n\u00a3255,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Since clubbing all the dwellings into a single transaction takes the total taxable value into the higher tax brackets of 15% and 17%, the total SDLT payable on such a transaction would take the tax bill to \u00a3423,750. This is the highest SDLT payable with an effective rate of 14.1%<\/p>\n

Scenario 3: Applying the six or more rule for non-residential SDLT<\/h2>\n\n\n\n\n\n\n\n
Band<\/th>\nNon-residential<\/th>\nTax<\/th>\n<\/tr>\n<\/thead>\n
Up to \u00a3150,000<\/td>\n0%<\/td>\n\u00a30<\/td>\n<\/tr>\n
\u00a3150,00 \u2013 \u00a3250,000<\/td>\n2%<\/td>\n\u00a32,000<\/td>\n<\/tr>\n
Over \u00a3250,000 (\u00a32.75m)<\/td>\n5%<\/td>\n\u00a3137,500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

By applying for the lower non-residential tax rates on the purchase of six dwellings, an investor could bring down the total tax liability to just \u00a3139,500, with an effective rate of 4.65%.<\/p>\n

These examples clearly show how the correct structuring and application of the non-residential rate could reduce an investor\u2019s tax bill by almost 42% compared with individual purchases and by 73% compared with a single transaction under the higher residential rates for additional dwellings.<\/p>\n

Benefit for international investors<\/h2>\n

Since April 2021, international property investors have also needed to pay a 2% surcharge on their applicable SDLT rate for residential purchases. By buying six or more dwellings and qualifying for the non-residential discount, you can save even that extra 2%, as there is no surcharge on such transactions. As a result, the \u2018six or more\u2019 rule is also beneficial for overseas portfolio investors.<\/p>\n

What counts as a \u2018dwelling\u2019 in the UK?<\/h2>\n

As per HMRC\u2019s SDLT manual<\/a>, a dwelling is defined as self-contained accommodation in which each household or tenant has access to basic facilities, such as a space to sleep, cook, and wash. These facilities cannot be shared with any other household or tenant.<\/p>\n

What is included in the definition of a dwelling?<\/h2>\n