Can I Buy My Parents' House

At Towerstone, we provide specialist property accountancy services for homeowners, landlords, and property investors. We have written this article to explain common routes and finance implications, helping you make informed decisions.

This is a question that comes up far more often than people realise. Sometimes it is about keeping a family home within the family. Sometimes it is about helping parents release money without selling on the open market. In other cases, it is driven by inheritance planning or simply practicality. On the face of it, buying your parents’ house sounds straightforward. In reality, it is perfectly possible, but it needs to be handled carefully because it raises legal, mortgage, tax, and family considerations that do not apply to a normal purchase.

In this article, I will explain whether you can buy your parents’ house in the UK, how it usually works in practice, the different ways it can be structured, and the common pitfalls people do not think about until it is too late. This is written from a practical UK perspective rather than an academic one.

The Simple Answer

Yes, you can buy your parents’ house.

There is no legal restriction preventing a child from buying a property from their parents. The transaction is treated like any other house sale, provided it is done properly and at arm’s length.

However, because the buyer and seller are related, lenders, solicitors, and HMRC will often look more closely at the details to make sure everything is genuine and correctly valued.

Buying at Market Value vs Below Market Value

One of the first decisions is whether you are buying the property at full market value or at a discounted price.

Buying at full market value is usually the simplest option. The process closely mirrors a normal sale, just with familiar faces on both sides.

Buying below market value is also possible, but it introduces additional complexity. The difference between the market value and the price you pay is treated as a gift from your parents to you.

That gift can have tax implications and can also affect mortgage availability.

Mortgages and Buying Your Parents’ House

If you need a mortgage, the lender’s rules matter a lot.

Most mainstream lenders are comfortable with buying from parents, but they will want clarity on how the transaction is structured.

If you are buying at full market value, the mortgage process is usually straightforward, subject to standard affordability checks.

If you are buying at a discount, some lenders allow what is known as a gifted equity arrangement. In this situation, your parents gift part of the property value to you and that gifted equity effectively replaces some or all of your deposit.

Not all lenders accept gifted equity, and those that do will usually require formal confirmation that the gift is non-refundable and carries no ongoing interest in the property.

Can the Gifted Equity Act as a Deposit?

Yes, in many cases it can.

If the property is worth £300,000 and your parents sell it to you for £240,000, the £60,000 difference may be treated as gifted equity. Some lenders will accept this as your deposit.

However, the lender will usually insist that your parents sign a declaration confirming that the gift is unconditional and that they will not retain any rights over the property.

This is an area where early mortgage advice is essential.

Stamp Duty Land Tax Considerations

Stamp duty land tax is based on the price you actually pay, not the market value, provided there is no outstanding mortgage being transferred.

If you buy the house for £240,000, stamp duty is calculated on £240,000.

However, if your parents have a mortgage and you take over responsibility for that mortgage, HMRC may treat the amount of mortgage assumed as part of the consideration. This can change the stamp duty calculation.

If you already own another property, the higher rate of stamp duty may apply, even though you are buying from family.

Capital Gains Tax for Your Parents

Capital gains tax is one of the biggest issues that parents often overlook.

If the property is your parents’ main residence and has always been their main residence, private residence relief usually means there is no capital gains tax to pay on the sale.

If the property is not their main home, such as a rental property or a former home they moved out of, capital gains tax may apply.

Importantly, selling to a child does not remove capital gains tax. HMRC treats sales between connected persons as taking place at market value for tax purposes, even if the actual price is lower.

This can result in a tax bill based on a value your parents never actually receive in cash.

Inheritance Tax Implications

Buying your parents’ house can also affect inheritance tax planning.

If you buy the house at full market value, there is usually no inheritance tax issue arising directly from the sale itself.

If part of the value is gifted to you through a discounted sale, that gifted element may be treated as a potentially exempt transfer for inheritance tax purposes.

If your parents continue to live in the property after selling it to you at a discount or as a gift, additional rules can apply. This can include what is known as a gift with reservation of benefit, which can bring the value back into their estate for inheritance tax.

These rules are complex and often misunderstood, so advice is strongly recommended where inheritance planning is a motivation.

Can My Parents Stay Living in the House?

This is a very common question and also a major area of risk.

Yes, your parents can continue living in the house after you buy it, but how this is arranged matters.

If they stay rent free, HMRC may treat the arrangement as a gift with reservation of benefit if the property was sold below market value. This can undermine inheritance tax planning.

If they pay you a full market rent, this can reduce inheritance tax risk, but it creates income tax obligations for you as the owner.

Mortgage lenders may also have conditions about who can live in the property, particularly if it is intended to be your main residence.

Is This Still a Normal Conveyancing Process?

Yes, but with extra scrutiny.

You and your parents should each have separate solicitors. This is essential to avoid conflicts of interest and to ensure that everyone is properly advised.

The property still needs to be valued, contracts still need to be exchanged, and the Land Registry still needs to be updated.

Because the transaction is between family members, solicitors will usually take extra care to document intentions clearly.

Can I Buy My Parents’ House Using a Joint Mortgage?

In some cases, yes.

Some families use joint borrower or family-assisted mortgage arrangements where parents and children are both involved in the borrowing.

These arrangements can help with affordability, but they add complexity and can have long-term implications for credit, ownership, and inheritance.

They should not be entered into without understanding the exit strategy.

Common Reasons People Buy Their Parents’ House

People usually explore this option for practical or emotional reasons rather than financial ones alone.

Common motivations include keeping the family home in the family, helping parents downsize gradually, providing security for ageing parents, or simplifying future inheritance.

These are valid reasons, but they should not override the need for proper planning.

Risks and Family Dynamics

Buying a house from your parents is not just a financial transaction.

It changes family dynamics and expectations.

Questions that need honest discussion include what happens if you want to sell later, what happens if relationships change, how repairs and maintenance are handled, and what happens if one party faces financial difficulty.

Putting these discussions off often leads to problems later.

A Common Mistake People Make

One of the biggest mistakes I see is people treating this as an informal arrangement because it is within the family.

Informality is exactly what creates risk.

Tax authorities, lenders, and courts will look at what actually happened, not what was casually agreed at the kitchen table.

Everything should be documented properly, even if it feels uncomfortable.

When Buying Your Parents’ House Makes Sense

This type of purchase can work well where expectations are clear, advice is taken early, and the structure is chosen for the right reasons.

It often works best where the purchase is at market value or where gifted equity is modest and carefully documented.

Problems usually arise where people try to combine too many objectives, such as minimising tax, avoiding rent, and retaining control, all at the same time.

Practical Summary

Yes, you can buy your parents’ house in the UK.

You can buy at market value or at a discount, but discounted sales introduce tax and mortgage complexity.

Mortgages are usually available, but lenders will scrutinise gifted equity and occupancy arrangements.

Capital gains tax and inheritance tax need to be considered carefully.

Your parents living in the property after the sale requires particular care.

Separate legal advice for each party is essential.

Final Thoughts

Buying your parents’ house can be a sensible and positive arrangement when it is done properly. It can provide security for your parents and an opportunity for you to get on the property ladder in a way that feels meaningful.

However, it is not a shortcut and it is not risk free. The involvement of family makes good planning more important, not less.

My advice is always to slow the process down, get mortgage, legal, and tax advice early, and be honest about both the financial and personal implications. A well-structured family transaction can work smoothly for years. A poorly structured one can cause stress long after the paperwork is signed.

If you would like to explore related property guidance, you may find can a limited company buy a house and how much to offer on a house useful. For broader property guidance, visit our property hub.