Which lenders offer concessionary purchase mortgages?
Tags: First-time buyers, Residential mortgages
Quick Summary
Concessionary purchase mortgages can provide a faster route to homeownership and a simple solution for parents and landlords, too. Landlords can sell directly to long-term tenants they know and trust, even if the tenant doesn’t have a cash deposit. By offering a discount on the sale price, that discount is treated as gifted equity, creating a simple and secure way to complete the sale. The minimum concession is normally 5% off market value, and discounts of up to 25% are accepted for landlord-to-tenant sales. Tenant criteria: at least one applicant must have been a tenant of the selling landlord for at least 1 year. For family concessionary purchase transactions, the benefits include reduced or no cash deposits required for the sale. Lower loan-to-value, so potential access to better mortgage rates. Also, keeping properties within the family and avoiding estate agent fees. costs.
Concessionary purchase mortgages: What you need to know
A concessionary purchase mortgage can open the door to homeownership for buyers in unique situations — especially where the property is being sold for less than its true market value. These mortgages help people buy homes more affordably, often with little or no cash deposit, by recognising the discount as part of the purchase.
What is a concessionary purchase mortgage?
A concessionary purchase happens when a property is sold for less than its market value — usually because the seller wants to help the buyer or is motivated to complete the sale quickly.
This type of mortgage is designed for buyers in special circumstances, such as when family members sell to each other at a discounted price. Tenants who are buying from a landlord at below-market value. People inheriting a property and buying out other relatives’ shares. Situations in which the seller offers a gift of equity as the deposit.
In these cases, the difference between the market value and discounted purchase price is typically treated as a “gifted equity”, which may count toward your overall deposit requirement when applying for a mortgage.
How does it work in practice?
Here’s a simple example:
If a home has a market value of £300,000 but a family member agrees to sell it to you for £240,000, the £60,000 difference can be treated as gifted equity. That equity can sometimes replace the need for a personal cash deposit when applying for a mortgage.
Lenders will still need to assess your income, credit profile, and the property’s valuation — but the discounted price is recognised as part of your deposit, reducing the amount you need to borrow.
Who can benefit from a Concessionary Purchase?
Concessionary purchase mortgages are most common in situations such as: First-time buyers who find it hard to save for a deposit. Tenants are buying the home they currently live in. Buyers purchasing from close family members. Individuals buying out inheritance shares from siblings or relatives.
These arrangements can make mortgages more accessible, particularly where saving for a large deposit would otherwise delay the purchase.
Aaron Strutt, product director at Trinity Financial, says: "For tenants looking to buy, this landlord to tenant concessioanry purchase option offers a lower (or no cash) deposit, making it ideal for first-time buyers. They get to stay in the home they already love, avoiding moving costs and disruption. For landlords looking to sell, it allows for a potentially quicker, smoother sale with reduced selling costs. It also provides the opportunity to support a loyal tenant, all with minimal disruption.
"TSB has a really good '5&5 concessionary mortgage' option for landlords planning a sale, which they could use to offset the 5% discount through savings on estate agent fees or paying several months of mortgage interest while the property is empty and on the market."
What do lenders look for when assessing concessionary purchases?
Lenders will typically expect a professional property valuation to confirm market value, not an estate agent's valuation. A clear explanation showing that the discount is a genuine gift, not a loan. Evidence of the relationship between buyer and seller (when relevant). Standard affordability checks based on your income and commitments.
Some lenders may require that the seller not continue living in the property after completion and may request additional legal documentation confirming the gifted equity and discount.
| Lender | Max loan-to-value (ltv) | Deposit requirement | Lending basis | Key conditions |
| Aldermore | Lending on the discounted purchase price based on the full value. | 5% discount off the market value. So no deposit. | Up to 25% maximum discount for landlord-to-tenant sales | Up to 50% maximum discount of the property valuation from the equity gift is available for inter-family sales. |
| Atom Bank | On a case-by-case basis. | No minimum deposit | Lower of valuation or purchase price | Deed of Gift indemnity insurance required |
| West One Loans | Up to 100% of discounted price (subject to criteria) | Minimum 5% equity gift | Discounted price | Max 50% discount (family) / 25% (landlord), vendor must vacate |
| Barclays | Based on lower of valuation or discounted price | Minimum 5% own funds (unless Springboard product) | Lower of valuation or discounted price | Insolvency Act checks, vendor must vacate. |
| HSBC | Max LTV on the lower of the discounted price or valuation | Borrower contribution expected | Lower of discounted price or valuation | Separate legal representation required |
| Generation H | LTV based on market value | Concession must be at least 5% | Market value | Seller must be close relative |
| Virgin Money | Up to 100% of discounted price or max LTV on valuation | No additional deposit required in some cases | Lower of discounted price or valuation | Bankruptcy search or indemnity required; vendor cannot remain |
| Hodge | Referral basis | Case-by-case | Immediate family only | Must refer to Lending Support |
| TSB | Up to 100% of purchase price (subject to limits) | 5% deposit OR 10% discount no deposit | Purchase price | Immediate family or sitting tenant only |
Source: Knowledge Bank and lender websites
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The information contained within was correct at the time of publication but is subject to change.
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Concessionary purchase mortgages aren’t always straightforward — not all lenders offer them, and criteria can vary. That’s where specialist advice can make all the difference.
A concessionary purchase mortgage allows a tenant to buy a property from their landlord at a discounted price below full market value. The discount acts as gifted equity and may be treated as part or all of the deposit. Lenders assess affordability and typically calculate the loan-to-value (LTV) using either the discounted purchase price or the open market valuation. They have different acceptance policies and rules.
Several UK mortgage lenders consider concessionary purchases where a tenant is buying from their landlord. Policies vary, but lenders such as Virgin Money, TSB, Barclays and certain specialist lenders may allow this type of transaction subject to criteria. Most require the landlord to vacate, the discount to be genuine (not repayable), and appropriate legal protections such as indemnity insurance.
In some cases, lenders may offer up to 100% of the discounted purchase price if the equity gifted by the landlord meets minimum requirements. However, lending is usually capped at a maximum percentage of the property’s open market value, often between 75% and 95% LTV. Additional checks such as insolvency declarations and proof of tenancy history are commonly required.
To qualify, most lenders require:
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A minimum tenancy period (often 12 months or more).
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A genuine discount with no future repayment or clawback.
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The landlord to fully vacate the property on completion.
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Separate legal representation for buyer and seller.
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Indemnity insurance covering potential Insolvency Act risks.
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Full affordability and credit assessment.
Reduced or no cash deposit required. Lower loan-to-value, so potential access to better mortgage rates. Keeping property within the family or keeping your rented home, and avoiding estate agent costs.
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