The reported £265m sale of Providence House in Chelsea has highlighted the impact of Stamp Duty Land Tax (SDLT) rules applying to purchases involving six or more dwellings.

According to Richard Turner, Director and SDLT Specialist at Menzies LLP, the transaction reportedly included the main property alongside five lower-value flats, allowing the acquisition to be treated as non-residential for SDLT purposes.

Turner said: “The current rules mean that acquiring six or more dwellings in a single transaction can result in the entire acquisition being treated as non-residential, creating a significant difference between buying five properties and buying six.”

Turner indicated this resulted in an estimated SDLT bill of around £13.25m, compared with approximately £31.8m if the full £265m had been taxed at residential rates – a difference of around £18.5m.

The issue extends beyond high-value transactions and can affect investors acquiring residential portfolios, blocks of flats and larger estates containing multiple dwellings.

He added: “The Government should consider whether the six-dwelling threshold remains the right way to determine the SDLT treatment of these transactions.”

Turner suggested a more graduated approach, or one taking greater account of the relative value of individual dwellings, could reduce the current “cliff edge” between five and six properties.

He also urged purchasers to consider SDLT implications before transactions are structured and contracts exchanged, particularly where multiple properties or separate dwellings are involved.