Family Concessionary Purchase vs Gifted Deposit: Key Differences Explained

Families often support one another when buying property, and two of the most common ways they help are through a concessionary purchase or a gifted deposit. While both methods involve financial assistance from a family member, the processes differ significantly. Understanding family concessionary purchase vs gifted deposit is essential when planning a property purchase, as lenders apply different checks, documentation requirements, and affordability assessments.

This guide explains how each option works, how lenders treat them, and the advantages and considerations for each. It provides general information only and does not offer regulated mortgage advice.

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What Is a Family Concessionary Purchase?

A family concessionary purchase occurs when a family member sells a property to another family member at below market value. The reduction in price becomes gifted equity, which some lenders allow to serve as the deposit.

Example

• Market value: £300,000
• Discounted sale price: £250,000
• Gifted equity: £50,000

No money changes hands for the deposit; the discount itself acts as equity.

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What Is a Gifted Deposit?

A gifted deposit is when a family member provides cash to help the buyer fund the deposit for a standard property purchase at full market value.

Example

• Market value: £300,000
• Buyer deposit: £30,000 (gifted by family member)
• Mortgage amount: £270,000

Here, the property is not discounted; the assistance comes through a financial transfer.

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Family Concessionary Purchase vs Gifted Deposit: Key Differences

Below is a detailed comparison to help clarify how each works.

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1. Type of Financial Help Provided

Feature	Concessionary Purchase	Gifted Deposit
How assistance is given	Through discounted sale price	Through cash transfer
Deposit source	Built-in equity	Gifted funds
Market value relevance	Market value determines LTV	Market value equals purchase price

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2. Lender Acceptance

Most lenders accept both structures, but:

• Concessionary purchases may be treated as higher risk because they bypass open-market pricing.
• Gifted deposits are widely accepted across the market.

Some lenders prefer gifted deposits because the documentation process is more standardised.

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3. Documentation Requirements

Requirement	Concessionary Purchase	Gifted Deposit
Gifted equity letter	Required	Not applicable
Deposit gift letter	Not applicable	Required
Proof of funds	Not needed for the discount	Mandatory for cash gifts
Relationship evidence	Sometimes required	Often required
Valuation focus	Ensures discount is genuine	Confirms property value only

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4. LTV (Loan-to-Value) Calculations

One of the most important distinctions in family concessionary purchase vs gifted deposit is how lenders calculate LTV.

Concessionary Purchase
LTV is based on market value, not the discounted price:

• Market value: £300,000
• Borrowing: £250,000
• LTV: 83%

Gifted Deposit
LTV is based on purchase price:

• Purchase price: £300,000
• Deposit: £30,000
• Borrowing: £270,000
• LTV: 90%

This makes concessionary purchases potentially more favourable for LTV brackets.

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5. Property Eligibility

In concessionary purchases:

• The lender must confirm the discount is genuine.
• The property’s condition may receive more scrutiny.

In gifted deposit purchases:

• Standard property checks apply.

The lender views each transaction according to risk.

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6. Solicitor Requirements

Solicitors’ checks differ significantly.

Concessionary Purchase Solicitor Checks Include:

• Verifying seller ownership
• Preparing gifted equity documentation
• Ensuring no repayment expectations
• Checking valuation supports the discount
• Verifying no side agreements exist

Gifted Deposit Solicitor Checks Include:

• Confirming the gift is unconditional
• Checking source of funds
• AML (anti-money-laundering) checks
• Ensuring deposit is not a loan

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7. Speed of the Process

Concessionary purchases may be simpler because:

• No estate agent is involved
• No competing buyers exist

However, extra legal steps can create delays.

Gifted deposit cases follow a standard timeline, but:

• Proof of funds
• AML checks
• Gift letters

…can add additional time.

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8. Flexibility for the Buyer

Concessionary Purchase:

• May allow buyers with smaller savings to proceed
• Strong initial equity position from the start
• Reduced or no deposit needed

Gifted Deposit:

• Allows buyers to purchase any property, not just one owned by family
• Gives more choice over location and property type

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Pros and Considerations of a Family Concessionary Purchase

Pros

• Discount may fully replace deposit
• Lower LTV improves options
• Buyer gains instant equity
• No competition from other buyers
• Often quicker negotiation process

Considerations

• Requires lender acceptance of gifted equity
• Valuation must support market value
• Legal documentation is more complex
• Family relationships must be clearly documented

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Pros and Considerations of a Gifted Deposit

Pros

• Widely accepted by lenders
• Buyer can choose any property
• Straightforward documentation
• Deposit improves borrowing options

Considerations

• Full purchase price must still be paid
• Family must provide proof of funds
• Cash gift may have tax implications for the giver
• Bank statements may raise privacy concerns for donors

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Which Option Works Best?

This depends on the situation:

• If you are buying a family-owned property → A concessionary purchase may be cost-effective and may eliminate the need for a deposit.
• If you are buying on the open market → A gifted deposit is the natural route.
• If affordability is tight → A concessionary purchase may provide better LTV support.
• If lender choice is important → Gifted deposits are generally more widely accepted.

This guide explains general patterns only and does not recommend one option over another, as regulated advice is required for personalised recommendations.

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How Lenders Assess Both Options

Regardless of which route is used, lenders assess:

• Income and affordability
• Credit profile
• Bank statement conduct
• Property valuation
• Legal compliance

Gifted funds or gifted equity do not override standard affordability or risk checks.

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Summary

When comparing family concessionary purchase vs gifted deposit, the key distinction lies in how the financial assistance is provided. A concessionary purchase creates instant equity through a discounted sale price, while a gifted deposit provides cash toward the purchase. Both are widely used, but each has different lender, solicitor, and valuation requirements. Understanding these differences can help families prepare for a smoother and more transparent mortgage process.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.