Can I Buy My Parents' House

Yes, you can legally buy your parents’ house in the UK, and it is a common transaction in both family and financial planning. Whether you are looking to help your parents downsize, keep the property in the family, or get onto the property ladder yourself, purchasing their home is entirely possible. However, because it involves close relatives, the process requires transparency, legal rigour and consideration of tax, mortgage and inheritance implications.

Many families use this route to pass property between generations, but it is important to treat the purchase like any other house sale to avoid complications later on. Both parties should have separate legal representation and ensure all paperwork is correctly filed.

How Does Buying a Parent’s House Work?

The process of buying your parents’ house begins just like any other property transaction. A valuation should be carried out to determine the current market value. You can agree to pay the full market price, or a discounted amount if your parents choose to gift part of the equity as part of the sale. Even if the sale price is below market value, it must be properly recorded and declared.

You will need a solicitor to manage the conveyancing process and to handle the title transfer, legal checks and mortgage conditions. Your parents will also need their own legal representative to avoid conflicts of interest. If you are taking out a mortgage, the lender will usually require an independent valuation and may have additional checks for related-party transactions.

What If the House Is Sold Below Market Value?

It is legal to buy a property from your parents for less than its full market value, a process known as an undervalue transaction. However, the difference between the sale price and the true value may be considered a gift, which could have inheritance tax implications.

For example, if the house is worth £300,000 and you agree to buy it for £200,000, the £100,000 difference may be treated as a gift by HMRC. Under current rules, gifts may be exempt from inheritance tax if the donor survives for seven years after making the gift. If they pass away within that period, tax may be due depending on the size of the estate and other gifts given.

Can I Get a Mortgage to Buy Their House?

Yes, you can apply for a standard residential mortgage to buy your parents’ house, provided you meet the lender’s criteria for income, credit history and deposit. However, some lenders may apply stricter checks for family transactions to ensure the sale is genuine and not a disguised gift or financial arrangement.

If your parents are gifting part of the equity as your deposit, your lender will require a gifted deposit letter confirming the money is a gift and not a loan. In some cases, your parents may stay on as joint owners or as tenants if you agree to let them live in the property after the sale, but this would involve different legal considerations and may affect your mortgage application.

What About Stamp Duty?

Stamp Duty Land Tax (SDLT) is still payable if you buy your parents’ house, just as with any other purchase. The amount depends on the sale price and whether you already own other properties. First-time buyers may benefit from SDLT relief, while owning another property may trigger the higher rate.

If you are gifted the house or receive it at a significant discount, stamp duty will usually be calculated on the amount you pay plus any outstanding mortgage that you take on. Your solicitor will be able to calculate the exact liability based on the transaction details.

Potential Risks and Considerations

While buying from your parents may seem simpler than buying on the open market, it still needs to be approached professionally. Avoid informal agreements or trying to save money by skipping solicitors. Any misunderstandings could lead to disputes, affect future probate proceedings or create issues with tax authorities.

You should also consider the impact on your parents’ future finances. If they plan to claim means-tested benefits or enter care, transferring or selling their home below market value could affect their eligibility or be seen as deliberate deprivation of assets by local authorities.

Conclusion

Buying your parents’ house is perfectly legal and can be beneficial for both parties, but it requires proper planning, independent legal advice and consideration of financial implications. Whether buying at market value or with a gifted element, the process must be documented and managed with care. With the right approach, it can offer a smooth way to support your family while securing your own home.