How Can First-Time Buyers Use a Concessionary Purchase From Their Landlord?
- 1 day ago
- 13 min read
Work out whether buying the flat or house you already rent from your landlord at a discounted price is the shortcut onto the ladder it looks, and see exactly how the mortgage, deposit, and stamp duty stack up when it is.
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Key Points
The discount often replaces your cash deposit entirely
Around half of UK lenders accept landlord-to-tenant sales
Stamp duty is paid on the price, not market value
Quick Answer
A concessionary purchase from your landlord lets you buy the property you already rent at below market value, with the discount often counting as your deposit. You borrow against the full market valuation, pay stamp duty only on the reduced purchase price, and move from tenant to owner without needing to save a large cash deposit first.
Updated: 22 April 2026
Written by Ben Stephenson, CeMAP-qualified Mortgage Broker.
Manor Mortgages Direct is FCA authorised, FRN 496907, has traded for nearly 30 years, is highly positively reviewed, 4.9 rated on Google, and has helped thousands secure the right mortgage. Bristol-based mortgage brokers, assisting clients nationwide.
Who Is This Guide For
This guide is for renters who have been offered, or are thinking about asking for, a discounted sale of the property they already live in. In particular:
First-time buyers whose landlord has hinted they want to sell
Long-term tenants worried about Section 21 changes in 2026
Renters with strong income but little saved deposit
Buyers in expensive regions priced out of the usual ladder routes
Tenants whose landlord is exiting the rental sector and offering first refusal
Table of Contents
What Exactly Is a Concessionary Purchase From Your Landlord?
A concessionary purchase, sometimes called a gifted equity purchase, is a sale where the seller accepts a price below the property's open market value. When your landlord is the seller and you are the sitting tenant, the gap between the valuation and the discounted sale price is treated as a gifted deposit in the lender's calculation. The landlord is effectively handing you equity rather than cash, and the mortgage is still calculated against the full market value of the property. In practice, this means a renter with modest savings can often complete on a purchase that would otherwise be out of reach. The route is covered by most mainstream lender criteria, though the specifics vary, and it sits alongside other first-time buyer routes in the UK market.
To see how this differs from a standard purchase: if a property is valued at £250,000 and the landlord agrees to sell it to you at £200,000, you have a £50,000 concession. For lender purposes, the loan-to-value ratio is worked out against the full £250,000 valuation rather than the £200,000 price. If you borrow £200,000, your LTV is 80% (not 100% of the purchase price), and you may not need to add any cash of your own to complete. That LTV distinction often moves you into a materially better rate band than the 95% bracket most tenants expect to land in.
The discount itself is subject to lender limits. For a standard landlord-to-tenant concessionary sale, the maximum permitted gift is typically around 25% of the property's market value, though many lenders cap it at 10-15%. A gift above those caps may still be arranged, but only with lenders who have specific concessionary purchase criteria rather than generic gifted deposit rules. A broker will confirm the cap that applies before you progress.
Why Are More UK Landlords Offering This Route in 2026?
The UK rental sector is in a sustained phase of landlord exits. Under the Renters' Rights Act 2026, which takes effect from 1 May 2026, Section 21 no-fault evictions are abolished, periodic tenancies replace fixed terms, and rent increases face stricter rules. On top of a decade of Section 24 tax restrictions, stamp duty surcharges on buy-to-let, and tighter EPC expectations, the business case for accidental and lower-margin landlords has thinned out. UK Finance has tracked a rising share of landlord remortgage activity that is genuinely an exit financing route, not a hold decision.
That matters for tenants. A landlord who needs to sell faces two realistic choices: serve notice and market the property vacant, or sell directly to the sitting tenant. Selling to the tenant avoids an empty-home period, estate agent fees (typically 1-1.5% of sale price), void-rent months, and the regulatory friction of ending a tenancy under the new framework. For many landlords, absorbing a modest discount to close quickly with no chain can be the cleaner exit. For the tenant, the same transaction removes competition from other buyers, skips the viewing circus, and means no move.
This is a narrow window worth acting on if the signals are present. Landlords who mention selling, hint at tax or pension pressure, or flag that they are not renewing fixed terms are often weighing both routes. A tenant who raises the concessionary purchase idea first is usually offered a better price than one who waits for the property to be listed with an agent. The right approach, at the right moment, is the difference between buying your home and finding somewhere new to rent in a tightening market.
Which Lenders Accept Landlord-to-Tenant Concessionary Sales?
Independent criteria search data for 2026 shows that roughly 42 of 74 residential lenders will accept a concessionary purchase from a landlord to a sitting tenant. That is a meaningful majority, and it includes high street banks, larger building societies, and several mid-tier challenger banks. The remaining lenders either decline concessionary purchases outright, restrict them to family-only gifts, or impose criteria that most tenant-landlord cases cannot meet. Generic gifted deposit rules are not always the same thing as a concessionary purchase policy, which is why a broker review is usually the quickest way to map your case to suitable lenders.
Common criteria to expect from an accepting lender:
Minimum tenancy length: most lenders want 6-12 months of continuous tenancy in the property before the sale, though some will consider shorter periods with strong evidence of a stable rental relationship.
A proper valuation: an independent RICS Home Survey or Level 2/3 survey is almost always required to confirm the discount is real rather than inflated against a low valuation.
Maximum discount / gift percentage: typically capped between 10% and 25% of market value, depending on the lender and borrower profile.
No ongoing financial link: the landlord cannot remain a beneficiary of the property after completion. A clean sale, not a delayed instalment or profit-share, is the lender's expectation.
Clean letting history: no rent arrears and no disputes logged against the tenancy in the last 12 months is usually a prerequisite.
Where cases slow down: some accepting lenders will not extend standard 95% LTV products to concessionary purchases, meaning you effectively need 10% LTV headroom to access their full range. In flats above commercial premises, ex-local-authority blocks, or non-standard construction, the lender pool thins further. If the property is leasehold with a short lease or an expensive service charge, some mainstream lenders will decline regardless of the concessionary element.
How Do the Discount, Deposit, and Stamp Duty Actually Work?
This is where most tenants get the biggest surprise, usually in a good way. The discount your landlord offers typically replaces the cash deposit rather than adding to it. Because the mortgage is calculated against the full market value and the discount is treated as equity, you often need little or nothing of your own savings to complete. In expensive regions, that single feature flips an unaffordable purchase into a straightforward one.
Example: The property is independently valued at £280,000. Your landlord agrees to sell for £224,000, a 20% discount. You borrow £224,000, which is 80% of the full market value, so your mortgage is a competitively priced 80% LTV loan rather than the 95% LTV pricing a standard first-time buyer would face. Your deposit contribution of your own money can be zero (subject to lender rules on cash required at completion for fees).
Stamp Duty Land Tax is charged on the purchase price, not the market value. HMRC's position is consistent: the chargeable consideration is what changes hands, not the underlying valuation. This is a material saving. On the same £280,000 / £224,000 example, SDLT is calculated against £224,000. Under the residential rates effective from April 2025 onwards, first-time buyer relief applies to purchases up to £300,000 (with tapered relief to £500,000), so many concessionary purchases fall under the zero-rate threshold entirely. Non-first-time buyers typically pay the standard rates above £125,000. The first-time buyer route often wins twice here: a better LTV bracket and a lower SDLT bill.
Other costs to factor in: valuation fees (often £400-£700), conveyancing fees (typically £1,000-£1,800 including searches, though tenant-to-landlord sales can be slightly cheaper because both parties already know the property), and any product fees on the mortgage itself. You will also need cash for the small items: searches, Land Registry fee, and a contingency margin. Plan for £2,500-£4,000 in cash even on a concessionary purchase where the deposit itself comes from the discount.
Case study: A professional in Bristol rented a two-bed flat for six years at £1,250 per month. Her landlord decided to exit the rental market ahead of the Renters' Rights Act changes and offered her the flat at £225,000 against an RICS valuation of £260,000, a 13.5% concession. She borrowed £225,000 at 85% LTV (against full market value), arranged the mortgage in around four weeks, and completed without needing to move. Her cash outlay at completion was £3,100 (fees, searches, survey, Land Registry). The deposit she would have needed on a standard purchase of a comparable property at 95% LTV was around £13,000 on a lower-value flat, plus the price premium of buying on the open market. The concessionary route saved her roughly £40,000 against competing for the same type of property and let her stay in the home she already knew.
What Risks Should You Weigh Before Agreeing?
The numbers are usually positive, but the downside scenarios are worth sitting with before you sign. Concessionary purchases carry a specific set of risks that standard purchases do not, and the tenant-landlord relationship adds personal friction on top of the financial analysis.
Valuation downvaluation risk. If the lender's surveyor disagrees with the agreed market value, the discount percentage changes. A flat agreed at £224,000 against an expected £280,000 valuation is an 80% LTV case. If the surveyor comes back at £250,000, you are at 90% LTV with a smaller concession than planned, which may push the deal into a different product band or trigger renegotiation.
The property itself may be a poor fit long term. Renting a property and owning it are different experiences. Maintenance issues the landlord previously covered become your responsibility. A leak that was a phone call for three years becomes a £3,000 boiler replacement after you complete. Factor in two to three years of realistic repair reserves before taking the plunge.
Leasehold properties can fail on criteria you never noticed as a tenant. Short leases (under 85 years remaining), ground rent escalation clauses, high service charges, or unresolved cladding status can all block a mortgage. If the flat is leasehold, commission a lease review early rather than waiting for conveyancing to surface issues.
The landlord may change their mind. Until exchange, the seller can walk away. Missing one lease clause or an inconsistency in the valuation could cost you the deal. Protect yourself by moving quickly on searches and survey, and by using an independent solicitor rather than one suggested by the landlord.
Family or personal complications. If the landlord is a relative, the concession needs to stand up to HMRC scrutiny as a genuine gift. Keep the valuation and any paperwork clean, and make sure the landlord has taken their own advice on capital gains tax before agreeing the price.
Restricted onward mortgage options. Some lenders will not refinance a property bought at a concessionary purchase for 6-12 months after completion. If you plan to remortgage quickly to capture a better rate, confirm the policy with the original lender or the market you are targeting.
Under the Consumer Duty framework, a good broker will walk through these risks openly rather than sell the concession as costless. Borrowers who flag potential issues upfront usually receive a more sympathetic read from underwriters, because there is time to structure the application around them rather than discovering them during drawdown. Honest conversations early protect the move; optimistic conversations early often derail it.
How Do You Raise This Conversation With Your Landlord?
Most landlord concessionary purchases start from one side mentioning a sale first. If you suspect your landlord is thinking about exiting but has not raised it, a direct but low-pressure conversation is usually the right move. The signal to look for: any mention of selling, remortgaging, tax advice, the Renters' Rights Act, or frustration with the rental process. Those are the cues that a sale is on the table in their own thinking.
A practical approach that tends to work:
Lead with the benefit to them. Landlords respond better to a reduced-friction sale than to a rent discount conversation. Mention no estate agent fees, no void period, no renovation work, no chain, and a quick close as the structured offer.
Acknowledge the discount is worth discussing separately. Most landlords will not agree to a meaningful discount in the first conversation. Frame the price as something to review against a surveyor's valuation rather than negotiating a figure from memory.
Come with broker-confirmed affordability. A Decision in Principle showing you can actually complete tends to change the landlord's view of the conversation instantly. Without it, you are a hypothetical buyer; with it, you are a contracted buyer in waiting.
Propose an independent RICS Home Survey or Level 2 valuation. Both parties funding half of this is common. It protects the landlord from a low-ball agreed price and protects you from a valuation that the lender will not accept.
Agree a sensible timeline. Four to eight weeks from agreed price to completion is realistic on a clean case. Set expectations early; slippage on concessionary purchases tends to happen when either side assumes the other is moving faster.
A broker usually sits usefully between the two sides. We can confirm what the lender will accept, structure the paperwork, and keep both parties aligned on timescales. The landlord-to-tenant concessionary purchase is one of the few property transactions where both parties often finish ahead of where they would have landed separately. The right moment to put it together is usually only available for a few weeks, because the landlord will otherwise list the property publicly and competing offers will complicate the decision.
FAQs
Do I Need Any Cash Deposit of My Own on a Concessionary Purchase?
In many cases no, because the landlord's discount acts as the deposit. You will still need cash for completion fees (valuation, survey, conveyancing, Land Registry), typically £2,500-£4,000. Some lenders also expect a small percentage of your own money contribution, often 5%, depending on the LTV and product. A broker will confirm the specific lender rule before application.
How Is Stamp Duty Calculated on a Discounted Landlord Sale?
HMRC calculates Stamp Duty Land Tax on the actual purchase price, not the market value. If a £280,000 flat is sold at £224,000, SDLT is assessed against £224,000. For first-time buyers, relief applies to purchases up to £300,000 with tapered relief between £300,000 and £500,000, so many concessionary purchases fall under the zero-rate threshold entirely. Non-first-time buyers pay standard residential rates above £125,000.
Can I Use This Route If I Have Only Rented For a Few Months?
Most lenders prefer 6-12 months of continuous tenancy before accepting a concessionary purchase from a landlord. A handful of lenders consider shorter tenancies with strong supporting evidence, such as a documented long-standing relationship with the landlord or a previous tenancy at another address they owned. A broker can identify which lenders take a more flexible view if you have only been a tenant for a short time.
What If My Landlord Wants to Sell Below Market Value to a Family Member Instead?
Family-to-family concessionary purchases are also permitted and follow a similar lender framework, though the maximum discount is often higher because the relationship is familial. Tenant concessionary purchases are distinct and governed by tenant-specific criteria in the lender's rulebook. If your landlord is exiting the market rather than gifting to family, the tenant route is usually the cleaner transaction for both parties.
Can I Renegotiate the Price If the Valuation Comes In Low?
Yes, and this is one of the main reasons both parties should agree the surveyor's valuation will set the reference point. If the valuation comes in below the expected market value, the discount percentage changes and lender pricing moves with it. A sensible framework is to agree the sale price as a fixed discount off the surveyor's figure rather than a fixed pound amount, so neither party is exposed to a surprise valuation.
How Long Does a Landlord Concessionary Purchase Usually Take?
Typically 6-10 weeks from agreed price to completion on a clean case, compared with 10-14 weeks for a standard purchase with a chain. The speed advantage comes from no chain, no property marketing, and both parties already knowing the property. Delays usually stem from leasehold complications, survey findings, or the landlord's capital gains tax position needing separate advice before exchange.
Will the Landlord Have to Pay Capital Gains Tax on a Discounted Sale?
Capital gains tax applies to UK landlords on the disposal of a second property, and HMRC assesses CGT against the market value of the property at disposal rather than the discounted sale price. This often surprises landlords, so advising them to speak to an accountant before agreeing the price is sensible. CGT is the landlord's bill, not yours, but if it reshapes what they can realistically accept, it changes the conversation.
Summary
A concessionary purchase from your landlord turns the discount on a below-market sale into your deposit, letting first-time buyers complete with little or no cash saved. Around half of UK lenders accept the route, stamp duty is charged on the purchase price rather than market value, and the Renters' Rights Act 2026 is pushing more landlords to exit via sitting-tenant sales. A broker-led application with a proper RICS valuation is usually the cleanest way through.
Related Guides
Your home may be repossessed if you do not keep up repayments on your mortgage. Manor Mortgages Direct is authorised and regulated by the Financial Conduct Authority, FRN 496907. The information in this guide is for general guidance only and does not constitute financial or tax advice. Tax treatment depends on individual circumstances and may change in the future.