Common Landlord Requirements When Selling at a Discount: Full Guide

More landlords are choosing to sell properties directly to their long-term tenants, often at a reduced price to achieve a quick, chain-free sale. These concessionary purchase arrangements can benefit both parties: the tenant may need little or no deposit, and the landlord avoids marketing fees and time-consuming viewings. Understanding landlord requirements when selling at a discount is essential for tenants preparing to secure a mortgage through this type of transaction.

This guide explains the requirements landlords typically face, what lenders expect from discount sales, and how both parties can prepare for a smooth process. This article provides general information only and does not offer regulated mortgage advice.

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What Is a Discounted (Concessionary) Sale?

A discounted sale—also known as a concessionary purchase—happens when a landlord sells a property to a tenant for below its open-market value. The difference between the market value and purchase price becomes gifted equity, which some lenders allow as the tenant’s deposit.

Example:

• Market value: £240,000
• Sale price: £200,000
• Gifted equity: £40,000 (equivalent to a 17% deposit)

While simple in concept, landlords must meet certain requirements to satisfy lenders, solicitors, and legal checks.

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Why Landlords Offer Discounted Sales

Landlords may choose to discount a sale to:

• Sell quickly without estate agents
• Avoid refurbishment costs before marketing
• Reward reliable long-term tenants
• Exit the rental market
• Reduce tax implications by selling directly
• Simplify the sale process

However, offering a discount triggers additional documentation and verification.

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Key Landlord Requirements When Selling at a Discount

Below is a detailed overview of what landlords are typically required to provide when selling at below market value.

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1. Verification of Ownership

The landlord must prove they are legally entitled to sell the property.
This usually involves:

• Land Registry title documents
• Proof of mortgage ownership (if applicable)
• Confirmation of any charges or restrictions

Solicitors review this early to avoid delays.

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2. Gifted Equity / Discount Letter

This is one of the most important requirements.

The landlord must provide a signed letter confirming:

• The discount amount
• That the reduction is a genuine gift to the tenant
• That no repayment is expected now or in future
• That the landlord will have no stake in the property after completion
• Their full name and contact details

Lenders rely on this document to confirm the discount is legitimate and not a hidden loan.

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3. Evidence of the Tenancy

Lenders usually request:

• The tenancy agreement
• Details of how long the tenant has lived there
• Evidence of rent payments (bank statements)

This helps confirm:

• A genuine landlord–tenant relationship
• No financial coercion
• A transparent transaction

Some lenders require a minimum tenancy length, often 6–12 months.

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4. Property Valuation

A lender-approved valuation is essential.
It must confirm:

• The true open-market value
• That the discount is genuine
• That the property is suitable for lending

If the valuer identifies structural issues or a lower market value, the mortgage offer may be adjusted.

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5. Confirmation of No Side Agreements

Lenders and solicitors require assurance that:

• No separate financial agreements exist
• The tenant is not expected to repay the discount privately
• There are no rent adjustments or incentives linked to the sale

Any undisclosed side arrangement can cause lenders to withdraw from the transaction.

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6. Compliance With EPC and Landlord Regulations

Although not always required by lenders, landlords may need to ensure:

• The EPC rating is valid
• Gas and electrical safety checks are up to date
• There are no outstanding enforcement notices

These help confirm the property is habitable and compliant with legal standards.

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7. Mortgage Lender Consent (If the Landlord Has a Mortgage)

If the landlord has a mortgage on the property, they may need consent from their lender to proceed with the sale—especially if selling at a significant discount.

This ensures:

• The sale does not breach the landlord’s mortgage conditions
• Any outstanding mortgage balance will be repaid at completion

Solicitors normally handle this communication.

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8. Full Transparency for AML (Anti-Money Laundering) Checks

The landlord must provide ID and address verification for AML checks, including:

• Passport or driving licence
• Proof of address
• Proof of funds if contributing towards sale costs

AML checks are standard for all property transactions.

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9. Clear Property Condition Disclosure

Landlords may need to disclose:

• Known defects
• Ongoing maintenance issues
• Planned works or historic repairs

This helps:

• Avoid disputes
• Support accurate valuation
• Ensure the tenant understands the condition of the property

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Additional Requirements That May Apply

Depending on the lender or solicitor, the landlord may also need to provide:

1. Written confirmation of vacant possession

If the property will be vacated before completion.

2. Information on service charges and ground rent

For leasehold properties.

3. Evidence of rent arrears resolution

If applicable.

4. Indemnity policies

If legal gaps or restrictions are identified.

These requirements ensure the discounted sale is legitimate and legally compliant.

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Why These Requirements Matter

Lenders must ensure:

• The discount is genuine
• The transaction is not at risk of fraud
• The tenant is not being pressured
• The property is sound security
• The financial structure meets mortgage criteria

Because the tenant may be borrowing with little or no cash deposit, lenders take extra care verifying the transaction.

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Common Challenges in Discounted Landlord Sales

1. Missing documentation

Gaps in tenancy history or ownership records can delay progress.

2. Disputes over property condition

Valuations may return lower-than-expected figures.

3. Complex ownership structures

Properties held in companies require additional paperwork.

4. Rent arrears

Recent arrears may raise questions about tenant affordability.

5. High discounts

Some lenders are cautious when the discount is unusually large.

Specialist lenders may still accept cases with more complex circumstances.

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How Tenants Can Prepare for a Smooth Discounted Purchase

Although this is not personalised advice, tenants often prepare by:

• Gathering 3+ months of bank statements
• Ensuring rent has been paid consistently
• Reviewing all credit files for accuracy
• Preparing ID and income documents early
• Speaking with the landlord to clarify gifted equity requirements
• Organising a property valuation as early as lender policy allows

The more prepared both parties are, the smoother the concessionary process will be.

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Summary

Understanding landlord requirements when selling at a discount helps both landlords and tenants navigate concessionary purchases confidently. Landlords must typically provide evidence of ownership, a gifted equity letter, tenancy documentation, valuation access, and full transparency throughout the process. Lenders apply careful checks because these sales often involve little or no deposit from the tenant.

With clear documentation and open communication, concessionary sales can be an efficient and beneficial option for both parties. This article provides general information only; personalised guidance requires regulated mortgage advice.