Concessionary Purchase Explained: Family Discounts vs Landlord Discounts

A concessionary purchase can significantly reduce the upfront cost of buying a home by allowing a buyer to purchase a property below its open-market value. These discounted transactions often occur between family members or between landlords and long-term tenants. Understanding concessionary purchase family discounts vs landlord discounts helps you determine how each type works, what lenders look for, and how the discount can affect the mortgage process.

This guide explains each concessionary purchase route, the differences between them, and what buyers should expect. It provides general information only and does not offer regulated mortgage advice.

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What Is a Concessionary Purchase?

A concessionary purchase occurs when a property is sold for less than its true market value. The difference between the market value and the discounted price is known as gifted equity.

For example:

• Market value: £300,000
• Discounted price: £240,000
• Gifted equity: £60,000

Many lenders allow this gifted equity to act as the buyer’s deposit, depending on their criteria.

The two most common concessionary routes are:

1. Family member selling to another family member at a discount
2. Landlord selling to an existing tenant at a discount

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Family Discount Concessionary Purchases

A family concessionary purchase happens when a parent, grandparent, sibling, or another close relative sells a property to a family member at below market value.

Why Do Families Offer Discounts?

Common reasons include:

• Helping a relative get onto the property ladder
• Passing a family home to a younger generation
• Achieving a fast and straightforward sale
• Avoiding estate agency fees
• Downsizing while keeping property within the family

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How Lenders View Family Discounts

Many lenders support this type of concessionary purchase because:

• The family relationship is clear and traceable
• The motivation for the discount is easy to understand
• The gifted equity is typically considered legitimate and unconditional

Lenders may treat the discount as a deposit, making the purchase accessible even if the buyer has limited savings.

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Documentation Needed for Family Discounts

Typical documents include:

• Gifted equity letter confirming no repayment is expected
• Proof of relationship (where requested)
• Property valuation report
• ID and income verification

Family sales often progress quickly because both parties are aligned on the sale terms.

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Pros of Family Discount Purchases

• Reduced or zero deposit needed
• Often simpler negotiation
• Flexible timescales
• Lower loan amount
• Immediate equity uplift

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Considerations

• Some lenders require the buyer to contribute part of the deposit
• Family disagreements can complicate the sale
• Gifted equity must be clearly documented for legal and lender purposes

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Landlord Discount Concessionary Purchases

A landlord concessionary purchase occurs when a landlord sells to their current tenant at a discounted price, often in recognition of:

• Long-term tenancy
• Property familiarity
• Desire to avoid marketing costs
• Tenant reliability

These scenarios are increasingly common in an evolving rental market.

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Why Landlords Offer Discounts

Landlords may discount the sale price to:

• Guarantee a fast, chain-free sale
• Reduce management responsibilities
• Simplify the transition
• Avoid refurbishment costs before selling
• Incentivise the tenant to buy

Tenants benefit from familiarity with the property and a potential saving on deposit requirements.

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How Lenders View Landlord Discounts

Most lenders recognise landlord-to-tenant concessionary purchases and may allow the discount to act as the deposit. However, this depends on:

• Length of tenancy
• Condition of the property
• Lender policy on non-family sellers
• Whether any arrears exist

Lenders may request the tenancy agreement and rent payment history.

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Documentation Needed for Landlord Discounts

Common requirements include:

• Gifted equity or discount letter from the landlord
• Current tenancy agreement
• Evidence of rent payments
• Valuation confirming market value
• Standard affordability and ID checks

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Pros of Landlord Discount Purchases

• Straightforward negotiation between existing parties
• No need for open-market competition
• Discount may replace deposit
• Familiarity reduces property survey surprises
• Often quicker than traditional purchases

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Considerations

• Fewer lenders accept non-family gifted equity
• Some lenders require a minimum tenancy length
• Property must meet lender condition standards
• Arrears or disputes during tenancy can raise questions

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Key Differences: Family Discounts vs Landlord Discounts

Understanding concessionary purchase family discounts vs landlord discounts requires comparing how lenders treat each scenario.

Feature	Family Discount	Landlord Discount
Lender acceptance	Widely accepted	Accepted by many, but fewer than family discounts
Gifted equity rules	Strongly supported	Accepted with documentation; some lenders restrict
Relationship evidence	Sometimes required	Tenancy agreement used as evidence
Deposit requirement	Often zero deposit	Zero deposit possible but lender-dependent
Motivation clarity	Typically straightforward	Must demonstrate no conflict or side arrangement
Valuation importance	High	High, especially for ex-rental properties
Underwriting flexibility	Typically broad	Depends on lender’s experience with tenant purchases

Both options can be viable routes into property ownership, but they have different requirements and lender appetites.

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How the Discount Affects Loan-to-Value (LTV)

Lenders often base the LTV on the market value, not the lower purchase price.

Example:

• Market value: £280,000
• Discount price: £230,000

If borrowing £230,000:
LTV = 82% (based on market value)

A lower LTV can improve lending options and affordability assessments.

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When Lenders May Decline Concessionary Purchases

Lenders may be cautious when:

• The discount exceeds typical expectations
• The buyer has recent adverse credit
• There is no clear relationship between buyer and seller
• The property requires substantial repair
• Documentation is incomplete or inconsistent

Specialist lenders may still consider more complex cases.

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Who Benefits Most From Each Type?

Family Discounts Best For:

• First-time buyers
• Buyers with limited savings
• Situations where property passes within the family

Landlord Discounts Best For:

• Long-term tenants
• Those familiar with the property
• Buyers seeking a fast, chain-free purchase

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How to Prepare for Either Type of Concessionary Purchase

Although this is not personalised advice, buyers typically prepare by:

• Reviewing all credit files
• Gathering income documents early
• Preparing bank statements
• Ensuring the seller understands gifted equity requirements
• Completing a property valuation early in the process
• Keeping records consistent across documents

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Summary

Understanding concessionary purchase family discounts vs landlord discounts is essential when exploring below-market-value opportunities. Family discounts are widely accepted and often allow buyers to proceed with little or no cash deposit. Landlord discounts are also common and can offer a practical route for long-term tenants to buy the property they already live in.

Both routes require clear documentation, a full valuation, and lender approval. While criteria vary, many buyers successfully secure mortgages through concessionary arrangements each year.

This article provides general information only. Personalised recommendations require regulated mortgage advice.