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Concessionary Purchase

(Last Updated: 24/07/2024)
5 min read

Concessionary purchase describes when you buy a property from a family member, often mum and dad, for less than the property's current market value - it is also called a transaction at undervalue. You can buy any amount under the current market value of the property.

The saving is often thought of as a gifted deposit; however, unlike a normal gifted deposit, there is no money changing hands, and the actual price being paid is the concessionary price under the market value, not the actual market price. If it is your mum and dad's property, then you should read this article next: Can I buy my parents' house under market value?

Concessionary Purchase Pros and Cons

  • Stamp Duty is payable by the buyers at the concessionary price, not the full market value;
  • 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) many mortgage lenders offer concessionary purchase mortgages.
  • The buyer needs a specific mortgage product for a concessionary purchase. Failing to do so could mean the mortgage offer is rescinded or takes time to change;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, the costs, including what stamp duty is payable and how long the process takes.

The difference between a Concessionary House Purchase vs. a Gifted Deposit

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

For example, if you have a gifted deposit of £50,000 from your parents to buy a £500,000 property, then you'll obtain a mortgage for the £450,000, and the full purchase price in the contract is £500,000. A concessionary sale is different because there is no actual gift given, so you obtain a mortgage for £450,000, and the price in the contract is £450,000.

It may seem unclear, but the easiest way to understand this is if you are physically paying the money, then it is a gifted deposit. If you are not paying the money but benefit from buying under market value, then it is a concessionary sale.

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.

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 can get a concessionary mortgage for this amount.

What is the concessionary purchase process?

You can go two routes, depending on whether you are paying some consideration or not. 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 updates of 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.

What stamp duty land tax is payable?

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
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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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