Concessionary Purchase and Gifted Equity: Buying a Home Below Market Value (2026/27)

How a Concessionary Purchase Works

In a concessionary purchase, a family member — commonly a parent — sells a property to you for less than its full market value, and the gap between the two figures effectively substitutes for a cash deposit. Rather than needing to save a separate deposit on top of the purchase price, the "gifted equity" itself satisfies some or all of the lender's deposit requirement, which can make homeownership significantly more achievable for a buyer who wouldn't otherwise have a large cash deposit available.

Lender Requirements

This isn't automatically available with every lender or every mortgage product — it depends on the specific lender's policy on gifted equity or concessionary purchases. Where it is available, lenders typically require an independent valuation confirming the property's true market value, a solicitor to formally document the arrangement (including confirming there's no outstanding loan secured against the seller's ability to gift the equity), and evidence that the transaction is genuinely between connected family members rather than an arm's-length sale dressed up as something else.

Stamp Duty on the Discounted Price

A frequently welcome detail of a straightforward concessionary purchase is that Stamp Duty Land Tax is generally calculated on the price actually paid for the property, not its full market value — so a property valued at £300,000 but sold to a family member for £240,000 would typically attract SDLT based on the £240,000 figure. This can represent a meaningful saving compared with a full-price purchase, though the exact structuring of the transaction and any linked transactions can affect this, so confirming the position with a conveyancing solicitor for your specific circumstances is important.

Inheritance Tax: The Discount Is a Gift

From the seller's side, the value they've given up — the difference between the property's market value and the price actually received — is generally treated as a gift for Inheritance Tax purposes. This brings the transaction within the normal Potentially Exempt Transfer framework: if the seller survives seven years from the date of the sale, the gifted value falls outside their estate entirely; if they don't, it may be brought back into the estate calculation, potentially subject to taper relief depending on how many of the seven years had passed.

Checklist

• Check whether your chosen lender accepts a concessionary purchase or gifted equity arrangement
• Get an independent valuation confirming the property's true market value
• Confirm SDLT is being calculated on the actual price paid, not the market value, with your solicitor
• Consider the Inheritance Tax and, where relevant, Capital Gains Tax position for the seller before proceeding

This article is general information, not financial or tax advice. Figures use 2026/27 UK Stamp Duty Land Tax, Inheritance Tax and Capital Gains Tax rules.