Glossary · UK
What is Concessionary Purchase?
A property purchase where the seller sells to the buyer below full market value, most often a family member selling to a relative, with the discount treated by lenders as the buyer's deposit.
Full Definition
A concessionary purchase (sometimes called a family concessionary purchase or gifted deposit through discount) is a property sale in which the seller agrees to sell to the buyer at a price below the property's full market value, most commonly a parent selling to an adult child, or a landlord selling to a sitting tenant, rather than the buyer paying the full price and separately receiving a cash gifted deposit. Rather than the buyer needing to find a cash deposit from savings or a gift, many mortgage lenders will accept the difference between the discounted price and the property's independently assessed market value as if it were the buyer's deposit, meaning a buyer can sometimes obtain a mortgage for 100% of the discounted purchase price with no separate cash deposit at all, provided the lender's specific concessionary purchase policy and maximum loan-to-value criteria (measured against the full market value, not the discounted price) are met. Lenders that accept concessionary purchases typically require a solicitor to confirm the relationship between buyer and seller, an independent valuation confirming the true market value and the size of the discount, and evidence that the seller is not simultaneously receiving further finance from the buyer that would undermine the lender's security position. Concessionary purchases are commonly used as a way to help family members onto the property ladder without the seller needing to gift cash outright, though sellers should be aware that selling substantially below market value can have Capital Gains Tax and Inheritance Tax planning implications of its own, particularly if the seller is disposing of a second property rather than their main home.