Can I Sell My House to My Son

Yes, you can legally sell your house to your son in the UK. There are no rules preventing you from selling property to a family member, whether it is your son, daughter, parent or anyone else closely related. However, there are important legal, financial and tax considerations to take into account, especially if you are planning to sell below market value or help them onto the property ladder.

Selling to a family member is known as a connected party transaction, and while the process is largely the same as any house sale, it does come with added scrutiny from lenders, tax authorities and conveyancers. Done correctly, it can be a useful way to keep property in the family or assist a relative with their first home purchase.

How does selling to a family member work?

Selling your house to your son follows the same basic legal process as any property transaction. You will need to agree a sale price, instruct a solicitor or conveyancer, and ensure that the legal title is transferred correctly via HM Land Registry. Your son will need to arrange a mortgage or pay cash, just as any buyer would.

If your son is taking out a mortgage, the lender will need to approve the transaction, and they may require additional checks or conditions. If you are gifting part of the property's value, such as selling at a reduced price, the lender will want to know exactly how much is being gifted and will require a signed declaration confirming this.

Can I sell below market value?

Yes, you can sell your home to your son for less than the full market value. This is commonly done to help children onto the property ladder or as a way of gifting wealth. However, this type of transaction must be handled carefully.

When a property is sold for less than it is worth, the difference between the sale price and market value is treated as a gift for tax purposes. This may have implications for inheritance tax if you pass away within seven years of the transaction. It also affects the calculation of capital gains tax if the property is not your main residence.

HMRC may review the sale if they suspect the value has been artificially lowered to avoid tax. Therefore, it is vital to have a formal valuation and clear documentation showing the intent behind the price reduction.

What about mortgages and lender approval?

If your son is applying for a mortgage to buy the property, the lender will need full disclosure of the relationship between buyer and seller. Many lenders are cautious about family transactions, particularly if there is a gifted deposit or reduced price involved.

The lender will require an independent valuation of the property, not just the agreed sale price. They will also ask for a gifted deposit letter if you are selling below value, confirming that the gift does not need to be repaid and gives your son full ownership rights.

Both parties will likely be required to seek independent legal advice to ensure there is no coercion or conflict of interest, especially when large sums of money or future inheritance are involved.

Do I need a solicitor?

Yes, both you and your son should have your own solicitor or conveyancer to manage the transaction. This protects both parties and ensures the process is carried out in line with UK property law. Shared legal representation is generally not allowed in connected party sales because of the potential for conflict.

Your solicitor will manage the transfer of title, handle the financial transaction and ensure that all documentation is correctly filed with the Land Registry. If your son is using a mortgage, his solicitor will also liaise with the lender.

Are there tax implications?

If the house is your main residence and you are selling it, you are usually exempt from capital gains tax. However, if it is a second home or rental property, you may be liable for capital gains tax on any profit made based on the market value, not the sale price.

There may also be inheritance tax implications. If you gift part of the house’s value to your son and then die within seven years, the value of the gift may be added to your estate for tax purposes. This is known as a potentially exempt transfer.

Your son may be required to pay stamp duty land tax based on the market value of the property, not just the discounted price. HMRC treats the transaction as if the full value has been paid, regardless of what was actually exchanged, especially where mortgages are involved.

Can I gift the property instead of selling it?

You can gift your house to your son outright, either while you are alive or through your will. However, gifting comes with similar tax implications and may affect your entitlement to certain benefits. It can also complicate matters if you still wish to live in the property, as this may be considered a gift with reservation of benefit.

If you intend to stay in the house, you would need to pay market rent to your son to avoid inheritance tax rules applying. It is important to seek legal and financial advice before choosing this route.

Conclusion

Selling your house to your son is entirely legal in the UK and can be a generous and practical decision. However, it requires careful planning to ensure the transaction is legally sound and tax-efficient. Professional advice from solicitors, financial advisers and mortgage experts is essential to avoid unexpected liabilities and ensure everything is done correctly. With the right preparation, you can transfer property within the family in a way that benefits both parties.