To compound the misery within the industry following the increases in SDLT rates on commercial transactions, a mooted exemption for large scale residential investors has also not materialised.

George Osborne confirmed yesterday that they will indeed be subject to the extra 3% rate on purchases of additional residential properties. In the recent consultation, an exemption for purchasers making a particular threshold level of investment in the sector, a “bulk purchase test”, had been suggested. However, the government has decided to apply the higher rates equally to all purchasers without an exemption for significant investors. It is not yet clear whether student accommodation will be excluded at all. The higher rates come into force on 1 April 2016.

The scope of this additional 3% charge brings the top rate of residential SDLT to 15% (assuming the additional 3% will not be added to the even higher rate which applies when enveloping residential property in corporate wrappers – whether or not this will be the case remains to be seen). It may be more efficient for investors in multiple residential units to relinquish ‘multiple dwellings relief’, under which the SDLT rate on multiple dwelling purchases is computed under the residential rules but based on the mean price per unit. If MDR is relinquished, investors could allow the transaction to be treated as ‘commercial’, which it can be for an acquisition of at least six separate units, with a top rate (now) of 5%.

Some of the detail may be clarified in the legislation when published. As of yesterday, the government had simply published the responses to the consultation and the government’s decisions on the final policy design.