Concessionary Purchase Explained: How a Discount Can Become Your Deposit
Buying a home below its market value—often from a family member, landlord, or employer—can allow the “discount” to count as your deposit. Here’s how it works, who it suits, and a realistic example of what Empreso can help you achieve.
Last updated: 12 August 2025 · Written for readers in England & Wales
What is a Concessionary Purchase?
A concessionary purchase is when a property is sold to you at a price below its current open-market value. The difference between market value and the agreed purchase price is called gifted equity (or the concession). Many lenders allow that concession to be treated like a cash deposit—subject to their criteria and affordability rules.
The key benefit: you may need little or no cash deposit if the discount is large enough and the rest of your case stacks up.
Common Scenarios
- Family sale: Parent sells to child below market value as a gift.
- Landlord to tenant: Landlord offers a discount to sell to a good tenant.
- Employer-led move: Some employers or institutions may facilitate discounted purchases.
- Developer incentives: Certain discounts exist, but treatment varies—lenders assess carefully.
What Lenders Usually Look For
- Clear evidence of current market value (e.g., valuation report).
- Gifted equity letter/solicitor confirmation that the gift is non‑repayable.
- Standard affordability and credit checks.
- Conveyancer to reflect the concession in the contract/transfer (e.g., consideration price on the TR1/TP1).
Worked Examples
Example A — Buying from Family with No Cash Deposit
Scenario: Market value is £250,000. Family agrees to sell for £212,500 (a 15% discount = £37,500 gifted equity).
| Item | Amount |
|---|---|
| Market value (from valuation) | £250,000 |
| Agreed purchase price | £212,500 |
| Gifted equity (discount) | £37,500 |
| Mortgage at 85% of market value (illustrative) | £212,500 |
| Buyer’s cash deposit required | £0 (the discount covers it) |
Some lenders will lend against the lower of purchase price or valuation; others may lend against market value in concessionary cases. Outcomes vary—professional advice is essential.
Example B — Tenant Buys from Landlord with a Small Top-Up
Scenario: Market value £300,000. Landlord sells for £270,000 (a 10% discount = £30,000 gifted equity).
| Item | Amount |
|---|---|
| Market value | £300,000 |
| Agreed purchase price | £270,000 |
| Gifted equity | £30,000 |
| Illustrative LTV desired | 90% |
| Max mortgage at 90% of purchase price | £243,000 |
| Buyer’s top-up needed | £27,000 (if lender lends on purchase price) |
If a lender treats the concession as deposit against market value, the top‑up could be reduced or eliminated. If they lend against purchase price, a small cash top‑up might still be needed.
Gifted Equity vs Gifted Deposit
Gifted equity is a discount written into the contract—often from family or a landlord—so the price you pay is lower than market value. Gifted deposit is cash transferred to you to use as deposit. Lenders usually require both to be genuine, non‑repayable gifts with a clear paper trail.
Who is it for?
- First‑time buyers who have family support or a landlord willing to sell.
- Home movers looking to buy a relative’s home below market value.
- Investors in specific cases—availability is more limited and highly case‑by‑case.
Availability and terms vary by lender; not all lenders accept every concessionary scenario.
The Process (Step by Step)
- Eligibility & strategy call: We confirm if your scenario fits typical lender rules and your affordability looks suitable.
- Evidence of value: A valuation (instructed via the lender) establishes current market value.
- Paperwork for the gift: Your solicitor records the reduced consideration; the gifter signs a non‑repayable gift declaration.
- Full application: Credit checks, documents, and underwriting.
- Conveyancing & completion: Contracts reflect the discount; funds are released; you complete.
Key Advantages
Pros
- Potentially little to no cash deposit required.
- Faster route onto (or up) the ladder.
- Can preserve your cash for fees, furnishings, or renovations.
Considerations
- Not all lenders accept all concession types; criteria change.
- Affordability and creditworthiness still apply.
- Valuation risk: if the valuer down-values, your sums may change.
- Legal independence may be required (separate advice for donor/recipient).
What Empreso Can Help You Achieve
Without naming any particular lender, here’s a realistic outline of outcomes we routinely explore and—where criteria allow—help clients to achieve:
- Structure a family or landlord discount so it is recognised as gifted equity and counted towards deposit requirements.
- Target a minimal cash outlay (and in strong cases, no cash deposit) by aligning the discount and loan‑to‑value with a suitable lender’s criteria.
- Navigate legal and underwriting expectations so the contract and gift wording satisfy conveyancers and the lender.
- Optimise the deal shape (e.g., LTV, product type, term) around your affordability, credit profile, and timeline.
Illustrative Empreso Case PatternExample
Buyer: First‑time buyer tenant · Market value: £280,000 · Landlord price: £238,000 (15% discount / £42,000 gifted equity)
Outcome we’d target: Secure a mortgage that recognises the concession as deposit, enabling completion with no additional cash deposit from the buyer—subject to affordability, valuation, and lender criteria at the time of application.
This is not a guarantee. Individual outcomes vary and depend on current lending policy, your circumstances, and the property itself.
FAQs
Will I pay Stamp Duty on the market value or the discounted price?
Ordinarily SDLT is based on the consideration you pay (the discounted price), but rules can be nuanced—especially where connected parties are involved. Always get advice from your conveyancer. You can check indicative figures using the official SDLT calculator.
Does the gift have to be non‑repayable?
Yes—if it’s repayable, it’s not a gift. Lenders typically require a signed declaration that the gift is unconditional and the donor will have no interest in the property after completion.
Can I use a concessionary purchase for a buy‑to‑let?
It’s less common but not impossible. Availability is limited and case‑by‑case. Expect tighter criteria and potentially higher deposit expectations than for residential owner‑occupation.
What if the valuation comes in low?
You may need to adjust the structure (e.g., add cash, renegotiate price, or choose a different product). Your adviser will walk you through options.
Next Steps
Get a Clarity Call
Bring your numbers (estimated market value, proposed price, income, commitments). We’ll map the routes and highlight what’s realistic for your case.
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Author: Alain Mbe
Alain Mbe is the founder of Empreso, a purpose-led network helping individuals create, protect, and transfer wealth through property, finance, and legacy planning. With over two decades of experience in property investment and a background as a qualified mortgage adviser, Alain is passionate about empowering people to achieve prosperity with intention. He writes about property strategies, financial planning, and personal transformation—offering practical insights and actionable steps to thrive in today’s evolving economy.