Concessionary Purchase Conveyancing Solicitors from SAM Conveyancing
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Concessionary Purchase

(Last Updated: 28/07/2022)
6 min read
Concessionary purchase describes when you buy a property from family, often mum and dad, for less than the property's current market value - it is also called a transaction at under value. The advantages are:
  • you can pass on property to your children at a more affordable level;
  • you can keep property within your family;
  • you can transfer under the market value or for zero consideration; and
  • (if required) there are many mortgage lenders who offer concessionary purchase mortgages.
The challenges that you face include:
  • You need to inform your mortgage lender the property is being sold under market value. Failing to do so could mean the mortgage offer is rescinded or takes time to change;
  • Capital Gains Tax may be payable
  • The gift may have an impact for inheritance tax purposes; and
  • The transaction could be voided if the party/ies gifting the property undervalue is made bankrupt.

In this article we explain the conveyancing process to transfer a property under market value, what are the costs including what stamp duty is payable and how long the process takes.

Concessionary House Purchase vs. Gifted Deposit

A concessionary purchase differs from a gifted deposit because a gifted deposit allows someone to buy a property at market value.

For example, if you are gifted £50,000 to buy a £500,000 property then the contract price is £500,000, not £450,000. Whereas a concessionary sale the price in the contract would be £450,000.

It's strongly recommended that you take advice from an independent mortgage broker if you are considering a purchase under market value because not all lenders offer mortgages for them and conditions may vary.

You should additionally instruct solicitors with concessionary experience to carry out the conveyancing because aspects such as stamp duty and the independence of legal advice for seller and buyer must be handled correctly given that a property is being sold for under market value.

Call us on 0333 344 3234 if you require either of these services.

What is concessionary?

A concessionary purchase is a transfer of a property under its market value that would be achieved if sold on the open market in an arm's length transaction.

For example: Your parents have a property valued at £200,000 which you'd like to buy but you don't have a deposit and your salary means you can only afford a £150,000 mortgage.

Your parents can help you by offering to sell you the property for £150,000 if you are able to get a concessionary mortgage for this amount.

What is the concessionary purchase process?

There are two routes you can go and it depends on whether you are paying some consideration or no consideration. The processes for both are:

    No consideration can be completed as a transfer of equity. The leaving parties get independent legal advice, ID1s and then the solicitor acting for the new owners handles the transfer and updating the Land Registry. This type of transaction can only be undertaken between close family members.
    Some consideration is completed as a standard sale and purchase. Seller and buyer have separate legal representation and the transaction follows the normal conveyancing process.

We handle both types of transaction so call today to get a quote on 0333 344 3234 (local call charges) or email

You are liable to pay your tax
Make sure to speak to a tax specialist when gifting property. HMRC have strict time lines for filing tax returns and for payment of any duty.

Frequently Asked Questions

Many lenders will consider granting mortgages for concessionary purchases where the sellers are:

  • Parents
  • Brothers
  • Sisters
  • Grandparents

Some lenders will consider granting mortgages for under market value where the sellers are:

  • Uncles
  • Aunts
  • Step Parents
  • Cousins

The most common transaction is the concessionary purchase of your parent's house.

Not normally: most mortgage lenders expect the seller to move out when you complete – known as vacant possession. You should also be aware that if your lender agrees to allow your relative to stay in the property, they may not, for example, allow you to build an annex to house them.

This is one of the reasons why it's a very good idea to seek advice from an independent mortgage broker, who can accurately pinpoint which lenders might fit your particular needs. Additionally your lender should be well-considered because the transaction normally involves close family members, for whom you should do all you can to keep potential stresses and mistakes to a minimum!

In theory you can buy a property which you've tenanted for at least one year from your landlord as a concessionary purchase, known as a landlord discount, the challenge is finding a lender who will permit this.

The same holds true for a developer offering you a large discount on the selling price of a property; it is permissible in this case, known as a developer discount, but new build properties are likely to be regarded as higher risk by lenders.

You are even permitted in law to take up a discounted property sale from a normal open market vendor, however this would be regarded as even higher risk and any lender will want to establish, for example, why the vendor wants to sell at a discount.

You should note that the higher the risk as perceived by the lender, the more likely that you'll be expected to present a deposit from your own funds, and this may be as high as 40%.

Yes as long as you:

  • obtain lender consent to the discount; and
  • use a buy to let mortgage product

Stamp Duty is payable on the consideration stated within the contract of sale, not the actual market value of the property. The challenge you may face is if you get the wrong mortgage product. Some mortgage lenders will require you to treat the discount as a gift and require you to state the full market price in the contract and thus you would have to pay stamp duty on that figure.

If consideration is nil then there is no stamp duty to pay. For example, if a property is gifted for no consideration then no stamp duty is payable.

Make sure you speak to a concessionary purchase mortgage advisor who knows which lenders offer these types of mortgage.

If the property isn't the seller's principal place of residence (HMRC have a test for this) and the disposal of the property is to someone connected to the seller then capital gains tax is payable on the full market value not the consideration stated in the contract of sale.

For more information read >> Capital Gains Tax on Gifted Property

If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.

Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.

Years between gift and deathTax paid
less than 340%
3 to 432%
4 to 524%
5 to 616%
6 to 78%
7 or more0%*

*Gifts are not counted towards the value of your estate after 7 years.

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Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
Reviewed by:

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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