The ‘six or more’ rule - how Taiwanese investors can access non-residential SDLT rates

For Taiwanese investors looking to build or expand a London property portfolio, the appeal of the UK capital goes beyond owning a home. The reasons are consistent: currency diversification, steady long-term capital growth, strong rental yields and a place for children studying in the UK.

However, buying multiple properties can lead to a significant tax cost. Stamp Duty Land Tax (SDLT) can have a direct impact on the amount an investor needs to put into a transaction. Ultimately, it can also affect the overall investment returns.

One rule that portfolio investors should be aware of is the ‘six or more’ rule. Where six or more dwellings are purchased as part of a single transaction, the purchase is treated as non-residential for SDLT purposes.

How UK stamp duty affects the returns

Stamp Duty Land Tax (SDLT) applies to every residential property purchase in the UK. Upon a successful purchase, the buyer pays HMRC a tax based on the property’s value. It can be on both a primary residence and an additional property.

Under the ‘six or more’ rule, investors can buy six or more properties in a single transaction to be treated as non-residential for SDLT purposes. For Taiwanese investors considering a bulk purchase in London, understanding this rule before structuring a transaction helps reduce the upfront tax cost.

Since April 1 2025, the SDLT rates for additional residential properties have also been revised.

Standard residential rates run up to 12% and additional-property rates up to 17%. Non-UK resident buyers also pay a 2% surcharge on top of these rates. To understand and plan these taxes better, it is important to have a structured purchase.

Why the abolition of MDR changed portfolio investing

Until June 2024, Multiple Dwellings Relief (MDR) was an important consideration for investors buying two or more residential properties. Where the relief applied, SDLT was calculated using the average value of the dwellings rather than simply applying the residential rates to the total purchase price. This could reduce the SDLT payable on some portfolio purchases.

However, MDR was abolished for transactions completing or substantially performed on or after 1 June 2024, subject to transitional rules. This changed the way investors need to approach bulk residential purchases.

It is important to remember that this distinction is important. The six-or-more rule is NOT a replacement for MDR. It is a separate SDLT rule that continues to apply to qualifying purchases.

The six-or-more property rule explained

Under Section 116(7) of the Finance Act 2003, an investor buying six or more qualifying residential units under one transaction may pay SDLT at the non-residential rates rather than the higher residential rates. The key requirements are important:

• At least six dwellings must be included.
• They must form part of a single transaction.
• The properties must qualify as dwellings for SDLT purposes.
• The transaction must be structured correctly.
• The effective date of the transaction must be considered carefully.

A ‘dwelling’ generally means a building or part of a building. This can include houses, flats and qualifying units that are still being constructed. The rule can therefore apply to a range of residential property purchases.

Practical buying scenarios

Consider a Taiwanese investor buying six London apartments for £500,000 each. The total purchase price is £3 million. There are three ways to look at the SDLT position.

Scenario 1: Six properties bought individually

If each £500,000 apartment is purchased as a separate additional residential property, the SDLT on each property would be approximately £40,000. For six properties, the total SDLT: £240,000.

Effective SDLT rate: 8%

This is because each £500,000 purchase is assessed separately using the higher rates for additional dwellings.

Scenario 2: Six properties bought as one residential transaction

Now assume the six properties are bought together but the transaction is treated as a residential purchase subject to the higher rates. The combined purchase price of £3 million moves the transaction into the higher SDLT bands.

The calculation would be:

Effective SDLT rate: 14.1%

This shows why combining several residential properties into one transaction does not automatically reduce SDLT.

Scenario 3: Six properties qualify under the six-or-more rule

If the six apartments qualify as six dwellings in a single transaction, the purchase can be treated as non-residential for SDLT purposes. The £3 million purchase would then be calculated at the non-residential rates:

Effective SDLT rate: 4.65%

Compared with buying the six properties individually, this would reduce the SDLT bill by £100,500. Compared with treating the £3 million purchase as one residential transaction subject to the higher rates, the difference would be £284,250.

Can Taiwanese investors qualify?

Yes. The six-or-more rule is not restricted to UK residents. A Taiwanese investor can potentially qualify if the transaction meets the relevant conditions. The same principle can apply to individual investors, companies and other types of buyers.

There is also an important point for overseas investors.

The 2% non-resident surcharge applies to residential transactions. HMRC confirms that the surcharge does not apply to purchases treated as non-residential. This means a qualifying portfolio purchase treated as non-residential can avoid the additional 2% residential surcharge that would otherwise apply to a non-UK resident buyer.

Common mistakes investors should avoid

Some common issues include:

• Buying fewer than six dwellings. The rule requires six or more dwellings. Buying five properties does not meet the threshold.
• Assuming separate contracts are one transaction. Buying several properties from the same seller does not automatically mean they form one transaction.
• Treating linked transactions as a single transaction. They can involve separate contracts even where the purchases form part of the same overall arrangement.
• Waiting until after exchange to seek advice. The transaction structure should be considered before contracts are exchanged.
• Assuming every residential unit qualifies. The definition of a dwelling can depend on the facts of the transaction.

How to structure a qualifying purchase

For investors considering the six-or-more rule, planning should start before the purchase is agreed. A typical process should include:

• Identifying the properties.
• Reviewing the seller and transaction structure.
• Reviewing the contracts.
• Confirming the effective date of the transaction.
• The buyer's solicitor should confirm which SDLT rates apply.
• Submitting the SDLT return on time and the tax paid within 14 days of the effective date.

Expert advice matters

The six-or-more rule can create a meaningful SDLT saving for investors buying a portfolio of properties. However, this rule is NOT about simply buying six units and claiming a discount.

The number of properties, contracts, transaction dates, ownership structure and nature of the properties can all affect the SDLT treatment.

For Taiwanese investors, this makes early planning particularly important. Before committing to a bulk purchase, it is best to have the proposed transaction reviewed by a solicitor or SDLT specialist.

Benham and Reeves Taiwan can help international buyers understand the London property market, identify suitable investment opportunities and navigate the wider buying process.

Invest in London with Benham and Reeves Taiwan

Benham and Reeves has more than six decades of experience in the London property market. For Taiwanese investors looking to build or expand a London property portfolio, our local team can connect you with the right property expertise in the UK.

Speak to the Benham and Reeves Taiwan team to understand the next steps.