Buying the Property You Rent: How a Landlord Concessionary Purchase Works

If you’re currently renting and want to buy the property you live in, a landlord concessionary purchase may be one of the most affordable ways to become a homeowner. Many landlords choose to sell to their tenants, often at a discounted price, because it avoids estate agent fees, reduces hassle and enables a smoother sale.

But how does a landlord concessionary purchase work, and how do lenders treat these arrangements? This guide explains the full process, how deposits work, what documents you need and how to secure a mortgage when buying the home you already live in.

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What Is a Landlord Concessionary Purchase?

A landlord concessionary purchase is when a landlord sells their rental property to the existing tenant at a discounted price. The discount is treated as gifted equity, which can be used instead of a cash deposit.

Example:

• Market value: £250,000
• Discounted sale price: £230,000
• Gifted equity: £20,000

That £20,000 is treated by the lender as the buyer’s deposit — even though no cash has been paid.

This structure makes homeownership far more accessible for renters who struggle to save a deposit while paying rent.

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Why Landlords Offer Discounts to Tenants

There are several reasons a landlord may choose to sell at a reduced price:

• Avoiding estate agent fees
• Avoiding long marketing periods
• Quick, predictable sale
• No risk of tenants refusing access for viewings
• No refurbishment costs needed to advertise the property
• Ability to release equity quickly
• Good relationship with the tenant

For many landlords, a slightly discounted sale is more appealing than a lengthy, uncertain open-market process.

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How Lenders Treat a Landlord Concessionary Purchase

Most lenders treat a landlord concessionary purchase similarly to a family concessionary purchase — but with some extra checks.

Key considerations:

1. Gifted Equity as Your Deposit

The discount acts as your deposit.
You may not need any cash deposit unless:

• The discount is very small
• You have credit issues
• The property has valuation concerns

2. LTV Is Calculated on Market Value

Lenders base the loan-to-value on the full valuation, not the discounted price.

Example:

• Market value: £250,000
• Loan: £230,000
• Effective LTV: 92%

This may offer better options than a 95% standard mortgage.

3. Not All Lenders Accept Landlord Discounts

Some lenders limit concessionary purchases to family transactions.
However, many lenders do accept landlord-to-tenant discounts.

4. The Discount Must Be Genuine and Non-Repayable

The tenant cannot secretly agree to repay the discount later.

5. Landlord Cannot Retain Ownership After Sale

Lenders require the landlord to sell the property fully, with no remaining interest.

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Deposit Rules for a Landlord Concessionary Purchase

Tenants often ask whether they need a deposit — and the answer is usually no, as long as the discount is large enough.

Gifted Equity Deposit Example

• Market value: £300,000
• Discount: £30,000
• Deposit: £30,000 (via equity, not cash)

This satisfies the lender’s deposit requirement.

When You May Still Need Cash

A cash deposit may be needed if:

• The discount is less than 5%
• Your credit file has recent issues (defaults, arrears, CCJs)
• You want a lower LTV for better rates
• The valuation highlights property defects

Cash deposits can also be combined with gifted equity.

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Can You Combine Cash Deposit With the Landlord’s Discount?

Yes — combining both creates a stronger mortgage application.

Example:

• Gifted equity: £20,000
• Cash deposit: £10,000
• Total deposit: £30,000

This may help secure lower interest rates and stronger affordability.

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Documents You Need for a Landlord Concessionary Purchase

Lenders and solicitors will require:

• A memorandum of sale confirming the discounted price
• A gifted equity letter from the landlord
• A full market valuation report
• ID and proof of address
• Proof of income (payslips, tax returns etc.)
• Bank statements
• Tenancy agreement (to confirm existing relationship)
• Solicitor’s declaration confirming discount terms

This paperwork ensures the discount is genuine and compliant with mortgage rules.

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What Solicitors Check

Solicitors must verify:

• The landlord owns the property outright or with a mortgage
• The discount is non-repayable
• There is no conflict of interest
• The tenancy will end on completion
• The landlord provides vacant possession
• Stamp Duty is calculated correctly
• The transfer of equity and title is legally valid

They also confirm to the lender that the concession meets mortgage requirements.

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Stamp Duty on a Landlord Concessionary Purchase

Stamp Duty is based on the discounted purchase price, not the market value.

Example:

• Market value: £280,000
• Discounted price: £240,000
  Stamp Duty is calculated on £240,000.

This can reduce or even eliminate Stamp Duty liability, especially for first-time buyers.

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What If Your Landlord Has a Buy-to-Let Mortgage?

If the landlord currently has a buy-to-let mortgage on the property:

• Their lender must allow the sale
• They may need to redeem their mortgage at completion
• Some lenders require written consent before accepting an offer

This is handled by solicitors during conveyancing.

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Can You Buy the Property You Rent With Bad Credit?

Often yes — especially with gifted equity acting as a deposit.

Lenders may assess:

• Age of credit issues
• Amount of gifted equity
• Stability of income
• Affordability and debt-to-income ratio
• Bank statement conduct

A concessionary purchase can offset risk caused by past credit problems.

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Benefits of Buying the Property You Rent

• No need to move out
• No estate agent fees
• Familiarity with the property condition
• Potentially no deposit needed
• Fast sale with lower stress
• Reduced Stamp Duty
• Avoid bidding wars
• Immediate affordability improvements

It’s one of the most straightforward routes to homeownership.

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Potential Challenges to Be Aware Of

• Not all lenders accept landlord discounts
• Property valuations may reveal issues
• Sellers may need to consider Capital Gains Tax
• Some letting agents may charge administrative fees
• Complex tenancy situations can slow things down

These are manageable with early planning.

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Is a Landlord Concessionary Purchase Right for You?

A landlord concessionary purchase is ideal if:

• You’re happy in the property
• Your landlord is open to selling
• You don’t have a deposit saved
• You want a simple, low-stress purchase route
• You want to avoid moving costs and disruption

With the right guidance, the process can be quicker and smoother than a normal purchase.

If you’d like support comparing lender options or checking eligibility, we’re here to help you through every step.