Can I sell property Below Market Value
What is BMV?
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Selling a house Below Market Value is a common practice in the housing market, providing financial relief or helping facilitate a quick house sale for those in urgent need. This approach can be particularly beneficial for homeowners facing financial difficulties, needing to relocate quickly, or wanting to help out family members by offering them a more affordable option.
It also appeals to those who want to skip lengthy open market sales, avoid the hassle of viewings, estate agent commissions and the uncertainty of finding a buyer.
Whether you are choosing or needing to sell Below Market Value, The Property Buying Company offers a secure and fast solution tailored to your needs. Our process ensures that you can sell your house in as little as 7 days, providing a guaranteed cash offer within 24 hours of signing up. We handle all the legal fees and hassle related to the sale, so you don’t have to worry about additional costs or implications.
Key takeaways:
Homeowners might sell Below Market Value for quick sales, financial relief, or to aid family or friends, using cash buyers or auctions.
Selling Below Market Value can trigger Capital Gains Tax and Inheritance Tax, especially if the price difference is considered a gift.
The Property Buying Company is the best way for you to sell Below Market Value property, helping you achieve a successful and secure sale.
Can I sell my house for less than market value?
When you sell a house, normally you will do it to try and turn a profit, but when a house becomes more of a burden than an investment, some homeowners decide to sell it Below Market Value.
This can happen for a multitude of different reasons, like if you have inherited a home, you need to sell it fast, you are experiencing a financial squeeze, or you are looking to relocate quickly.
It is possible to sell a house for less than market value on the open market, which can convenience some buyers to move faster, or you may be able to sell their house through a cash buyer or property auction.
Can I buy my parents house for less than market value?
Yes, you can buy your parents’ house for less than market value. There are no legal restrictions preventing your parents from selling their house to you at a lower price, provided there are no specific restrictions on the property, such as it being a retirement home.
If you buy your parents’ home for less than market value, you are essentially receiving the rest of the property as a gift. For example, if the property is worth £300,000 and you buy it for £250,000, it means £50,000 has been gifted. As a result, there will be various tax implications that should be considered before deciding to proceed with the sale.
If your parents own their main residential property outright without any mortgage, they have the option to gift it to you in its entirety, even if they continue to live in it. This option means there will be no Stamp Duty Land Tax payable.
However, if your parents wish to continue occupying the property, it will still be liable for inheritance tax when they pass away, unless they pay rent at the market rate. Subsequently, you must declare and pay income tax on that rental income.
Can you sell a property Below Market Value to a family member?
Yes, you can sell a property Below Market Value to a family member. This is a common practice and can be beneficial for both parties. However, there are some potential implications to be aware of:
Inheritance Tax (IHT)
If the difference between the market value and the sale price is significant, it may be considered a gift. Gifts above the nil rate band given within seven years of death may be subject to Inheritance Tax.
If your parents continue to live in the property after the sale, the Inheritance Tax may still be payable unless they pay market-rate rent.
Capital Gains Tax (CGT)
If the property is not your parents’ main residence, the sale may incur Capital Gains Tax. You may also face CGT when you sell the property if it is not your main residence.
Deprivation of assets
If your parents need to go into a care home, selling their house for under market value may be seen as deliberate deprivation of assets, affecting their eligibility for funding.
Stamp Duty
Stamp Duty Land Tax may be payable depending on the purchase conditions and whether your parents own the property outright.
Can you sell your house cheap to a friend?
Yes, you can sell your house cheap to a friend. Selling your house privately to a friend, family member or acquaintance is entirely possible and can be a straightforward process if handled correctly. Someone may wish to sell their house cheap to a friend, because:
They need to sell quickly
If a seller needs to sell their house quickly, selling to a friend at a lower house price can speed up the process. It can avoid lengthy procedures associated with putting the house on the market, and the buyer can quickly secure a home.
They need to help a friend out
Sometimes, the seller may simply want to help a friend who is looking for a new home. Offering a lower price can make homeownership more affordable for the friend.
For flexible terms
When selling to a friend, you can directly negotiate the terms of the house sale. This may include agreeing on a lower price or arranging more flexible payment terms compared to traditional open market buyers.
However, selling your house to a friend carries the risk of damaging your friendship if things go wrong. Disagreements over the property’s condition or if the sale falls through can strain your friendship.
Additionally, selling your house below market value means you won’t realise the full potential profit from your home. Furthermore, you’ll need to cover solicitor fees, which can be an additional cost.
Stamp Duty
Stamp Duty Land Tax may be payable depending on the purchase conditions and whether your parents own the property outright.
What is a Below Market Value house?
A Below Market Value (BMV) house is a residential property that is sold at a price lower than its actual market value. These properties are priced below similar properties in the same location, making them appear to be bargains at first glance – and often, they are.
However, there can sometimes be more concerning reasons for the quick sale, such as costly subsidence or potential dry rot, which is why a thorough survey is essential. Additionally, potential buyers should conduct their own due diligence to avoid properties with hidden issues, such as legal disputes or boundary issues.
There are several reasons why a house might be priced Below Market Value:
Repossession: The property is about to be repossessed because the owners can’t keep up with mortgage payments. Banks often seek a quick sale to recoup some of their money.
Financial difficulties: Owners facing financial difficulties may need to sell quickly and can’t afford to market their home on the open market.
Relocation: The owner may be moving abroad or relocating for a job and wants to sell as soon as possible to buy another property.
Renovation needs: The property may require significant work, such as major structural repairs, which the current owner cannot afford or is not inclined to undertake.
Additionally, house prices can be influenced by the state of the housing market and whether it is a buyer’s or seller’s market. This significantly affects whether a house is considered Below Market Value (BMV).
In a slow market, if a house is struggling to sell, the owner may reduce the asking price or offer it at BMV to help get a quicker sale. This strategy helps speed up the selling process by making the property more attractive to potential buyers.
Below Market Value properties often attract investors looking for profitable opportunities such as rental income or property flipping. However, buyers of Below Market Value properties may face challenges securing a mortgage, as lenders often base loans on the property’s market value, not the discounted price.
Is selling a house under market value normal?
Yes, selling a house under market value is a relatively common practice in the housing market. While it may seem counterintuitive, there are several legitimate reasons why a homeowner might choose to sell property below market value:
Financial distress:
Homeowners facing financial difficulties, such as mounting debt or an inability to keep up with mortgage payments, may opt to sell quickly at a lower price to avoid repossession or bankruptcy.
Quick house sale:
Sometimes, sellers may need to speed up the sale due to urgent circumstances like job relocation, health issues or other personal reasons. Selling a house under market value can attract buyers more rapidly, helping to secure a faster transaction.
Inherited property:
Individuals who inherit properties may prefer a quick house sale to avoid the responsibilities and costs associated with maintaining an additional home. In such cases, selling Below Market Value can simplify the process.
Avoiding repairs:
Properties requiring significant repairs or renovations might be sold below market value. Owners who lack the resources or inclination to undertake these improvements might find it more practical to sell under market value.
Tenanted properties:
Some landlords may choose to sell their tenanted properties below market value for several reasons. Firstly, it allows them to avoid the eviction process, leaving the tenants in place for the new owner. Secondly, it enables a quick exit from the rental market, allowing the landlord to reinvest the funds elsewhere promptly.
For homeowners considering selling a house under market value, The Property Buying Company offers a reliable and hassle-free solution. We provide a guaranteed cash offer within 24 hours, and you can sell your house in as little as 7 days.
Our comprehensive service includes covering all legal fees, ensuring a seamless experience. With our excellent customer care and status as the UK’s most highly rated cash buyer, you can trust us to handle your sale with professionalism and integrity, helping you move forward quickly and confidently.
Is selling house Below Market Value a good idea?
Selling a house Below Market Value can be a good idea depending on your specific circumstances and priorities. Here are some factors to consider, weighing the advantages and disadvantages of such a house sale:
Pros of selling Below Market Value
More often than not, when a house is sold Below Market Value, it is typically sold to a cash buyer, whether it can be a company or an individual. This allows for several benefits:
Fast, guaranteed offer:
One of the main advantages of selling your house below market value is receiving a quick, guaranteed offer. This means you can avoid the hassle of showings and open houses, allowing you to sell your house rapidly.
Avoid agent commissions:
By accepting a direct cash offer, you can bypass estate agent sales commissions, saving you a significant amount of money. This cost-saving can be beneficial, especially if you are looking to maximise your immediate financial return.
Skirt lengthy listing process:
Selling Below Market Value allows you to avoid the lengthy process of prepping, staging and marketing your home. This can be particularly advantageous if you need to move quickly or if you find the traditional selling process burdensome.
Eliminate sale uncertainties:
Cash offers from investors or companies, remove the uncertainty of waiting for an interested buyer on the open market. This can be a relief, particularly in a slow market, where properties can sit unsold for extended periods.
Sell as-is:
Selling as-is means you don’t have to invest time and money into repairs or updates, which can be ideal if your home requires significant work that you are unwilling or unable to undertake.
Flexible timelines:
When selling to investors or direct buyers, you can often negotiate flexible timelines that better suit your needs, such as rent-back options or extended completion dates.
Cons of selling Below Market Value
However, selling Below Market Value does have its downsides; otherwise, everyone would choose this option. The most significant drawback is that you are leaving money on the table, forfeiting potential profits that you could earn by selling at full market value.
This decision can significantly impact your financial returns, particularly in a strong housing market where properties can fetch higher prices. Additionally, selling Below Market Value can affect your financial stability and future investment opportunities.
By not maximising your home’s value, you may miss out on the equity that could be used for other financial goals or investments. It’s important to weigh these potential losses against the benefits of a quicker, more convenient sale to determine if selling Below Market Value aligns with your overall financial strategy.
Does it look bad to reduce house price?
If you are selling your home on the open market and it is struggling to attract offers, you may wonder if reducing your asking price will reflect poorly on your home. The good news is that reducing your asking price can sometimes be quite beneficial, but it should be done judiciously.
Reducing your asking price once or twice can re-energise interest in your house and attract new potential buyers. However, repeatedly lowering your price, more than two or three times, can deter buyers as it might signal underlying issues with the house.
Instead of continuously lowering your house price, consider taking your house off the market temporarily to get a thorough survey. This will help you ensure that your house is priced accurately and may uncover any issues that need addressing, which can improve its appeal.
Another option is to sell your house to a cash buying company. This approach often involves selling Below Market Value but offers the advantage of a guaranteed sale. It’s important to pursue this option before reducing your asking price on the open market.
If you reduce your house price first, the cash buyer’s offer will be based on the lower price, typically offering 75% to 85% of that reduced amount.
If you have a house and are considering a price reduction, The Property Buying Company provides an ideal alternative. By choosing us, you avoid the need for multiple price reductions and benefit from a fast, guaranteed cash sale.
We offer a fair price for your property and cover all legal fees, ensuring a smooth and hassle-free process. As the UK’s most highly rated cash buyer, we prioritise customer satisfaction, making it easier for you to sell your home quickly and move forward with confidence.
Does selling house Below Market Value speed up house sale?
The speed at which you can sell your house Below Market Value largely depends on the method you choose. If you list your house on the open market at a Below Market Value (BMV) price, you may still experience a lengthy wait as you search for the right buyer.
However, if you opt to sell to a cash buyer, the process can be significantly faster, potentially allowing you to complete the sale in as little as 7 days. Here are the different speeds at which houses can sell:
| Method to sale | Timeline |
|---|---|
| Cash buying company | 7+ days |
| Online house auction | 7 to 28 days |
| Cash investor | 28+ days |
| Modern estate agent | 28+ days |
| Traditional property auction | 56 days |
| Online estate agent | 56+ days |
| Traditional estate agent | 56+ days |
Should you drop your house price for a quick sale?
Dropping your house price can attract price-sensitive buyers, but it’s important not to lower it too much too soon. The housing market has shifted from a seller’s market to a buyer’s market over the past 18 months, prompting many sellers to adjust their house prices to meet buyers’ expectations.
Pricing a home can be particularly challenging, especially for unique or larger properties. A seller’s motivations, urgency, and budget requirements play a significant role in their pricing strategy. The asking price impacts whether the home attracts enough interest to generate viewings and offers, ultimately influencing the time it takes to agree on a sale.
Recent data from Zoopla shows that 75% of homes reach the sale-agreed stage within 90s days, with the average time to agree on a sale being 34 days. If you haven’t received an offer within 30 days, it might be wise to consult your estate agent to ensure your house is still priced correctly.
While house prices are generally falling, leading to increased scrutiny from buyers, hastily cutting your house price may not be the best approach. Consider how quickly you need to secure an offer. Market trends typically weaken in the final months of the year but often pick up after Christmas.
If you’re not in a rush to sell, you might benefit from waiting until January when the market is expected to improve.
Do most houses sell for asking price?
Not all houses sell for their asking price — in fact, only about two thirds of sales agreed in September 2023 were for homes where the asking price was not reduced.
It’s important to note that the initial asking price must be set correctly. When priced right from the beginning, many homes can sell close to or at their asking price without the need for reductions.
The current market conditions also play an important role in whether your house will sell. With the transition to a buyer’s market, more scrutiny is placed on prices, and buyers are often looking for value, making it essential for sellers to price their homes competitively.
Despite weaker demand and more price-sensitive buyers, a significant portion of properties still manage to sell at their initial asking price when prices are appropriate.
If you are looking to avoid the complexities of pricing and market fluctuations, The Property Buying Company offers a reliable alternative. We provide a guaranteed cash offer for your home, ensuring a fast and straightforward sale process.
By choosing us, you can bypass the uncertainties of the open market, avoid potential price reductions and benefit from our comprehensive service that covers all legal fees. As the UK’s most highly rated cash buyer, we are committed to making your selling experience smooth and efficient, helping you achieve a quick and secure sale at a fair price.
Can I sell my house for whatever I want?
Technically, you can list your house for any price you choose, but several factors can significantly impact whether you can actually sell it at that price. If a buyer is using financing, such as a mortgage, the sale price must align with the property’s appraised value.
Mortgage lenders require an appraisal, or house valuation, to determine the true market value of the home. If your house is significantly overpriced, the appraisal will likely come in lower than your asking price. Most mortgage lenders will not approve a loan amount higher than the appraised value, as lending on an overpriced property is considered extremely risky.
This means that even if you find a buyer willing to pay your asking price, their ability to secure financing may be compromised if the appraisal doesn’t support the sale price. Consequently, you may either have to lower your house price to match the appraised value or risk losing the buyer.
In addition to lender considerations, an overpriced home can struggle to attract interest from buyers. The longer a house sits on the market without offers, the more likely potential buyers are to perceive it as undesirable or overpriced. This can ultimately delay your house sale and may even result in a lower final selling price than if you had it priced competitively from the start.
What happens if I sell my house for less than I bought it?
You can sell a house for less than you bought it, as long as you don’t owe more on your mortgage than the house’s current value. If this happens, you will enter negative equity. This situation can be particularly challenging if you still have an outstanding mortgage.
If you find yourself in negative equity and need to sell, it’s important to communicate with your mortgage lender. The lender will need to approve the sale, especially if the sale proceeds won’t cover the remaining mortgage balance. Without a plan to repay the shortfall, the mortgage lender can prevent the sale from going through during the conveyancing process.
When dealing with negative equity, you should:
Consult your lender: Inform your mortgage lender as early as possible about your intention to sell at a loss. They may offer solutions or advice on managing the outstanding debt. You may also wish to consult an organisation like Citizens Advice.
Explore financial situations: Assess your financial situation to determine how you can cover the shortfall. This might include using savings, negotiating with the lender for a repayment plan, or considering a personal loan.
Consider alternative options: If selling at a loss isn’t feasible, you might explore renting out the property until market conditions improve or until you can better manage the financial impact.
Is it illegal to sell my house for less than its worth?
It is entirely legal to sell a house for less than its market value. This practice is known as selling Below Market Value. However, selling your house for less than its worth can become problematic if it results in negative equity, especially if you still owe money on your mortgage.
In cases of negative equity, where the sale proceeds do not cover the outstanding mortgage balance, you must coordinate with your mortgage lender. If you fail to arrange appropriate repayment terms for the remaining balance, your lender may take legal action to recover the owed amount.
If you are considering selling your home for less than its worth, The Property Buying Company offers a practical solution. We provide a guaranteed cash offer, ensuring a quick and secure sale process. By selling with us, you can avoid the complications of negative equity and legal issues, as we help manage the sale to cover your outstanding mortgage balance.
Our comprehensive service includes covering all legal fees, making the entire process smooth and stress-free. As the UK’s most rated cash buyer, we are committed to providing you with a reliable and efficient selling experience, allowing you to move forward with confidence.
Tax implications of selling a house Below Market Value
When selling a house Below Market Value, there are several tax implications to consider. The two main taxes to be aware of are Capital Gains Tax (CGT) and Inheritance Tax (IHT). Both of these taxes are complex, so let’s explore the key implications in the UK.
Capital Gains Tax
You will typically pay Capital Gains Tax when you sell a property for a profit (the sale price being higher than the price you purchased it). However, when you sell your home Below Market Value, the CGT calculation is based on the lower sale price, which might result in a lower tax bill.
If a property has appreciated significantly, selling it at a lower price could potentially reduce the Capital Gains Tax owed. For instance, if you’ve inherited a house that has increased in value over the years, selling it at a lower price might seem beneficial to minimise the CGT.
However, selling Below Market Value doesn’t always avoid Capital Gains Tax. HMRC may treat the sale as a “disposal at undervalue,” where the gain is calculated based on the market value rather than the sale price, which means you could still face significant Capital Gains.
Here are some situations where selling Below Market Value can help with Capital Gains Tax:
Selling to a spouse or civil partner: Transfers between spouses or civil partners are exempt from Capital Gains Tax.
Gifting to family members: While gifting a home might help avoid the immediate CGT, it can trigger other taxes like Inheritance Tax.
Selling to a charity: Selling to a charitable organisation can qualify you for Capital Gains Tax relief, as gifts of land and property to charities are exempt.
Inheritance Tax
Inheritance Tax is a tax on the value of your estate when you die, including all possessions, property, money and investments. It’s not always applicable, depending on the value of the estate.
Selling your home Below Market Value can affect your Inheritance Tax, especially if the sale is considered a gift by HMRC. If you sell to a family member or friend at a reduced price, the difference may be viewed as a gift and subject to Inheritance Tax if you are due within seven years of the sale.
Gifts made within seven years of your death are considered potentially exempt transfers and may not be subject to Inheritance Tax. The tax rate decreases the longer you live after making the gift.
Gift Aid
If you sell your house Below Market Value to a charity, you may be able to claim Gift Aid on the difference between the market value and the sale price. This can increase the value of the charitable donation by 25% at no extra cost.
Here at The Property Buying Company, we offer a reliable and straightforward way for selling your home. By choosing us, you can navigate the complexities of tax implications more easily, as our experienced team of sales progressors will guide you through every step.
Sell your house Below Market Value
If you are looking to sell your house Below Market Value, then we can help. Here at The Property Buying Company, we are one of the UK’s leading cash house buying companies, and we can buy your house for 75% to 85% of your market value, in exchange for a sale in as little as 7 days.
Unlike other cash buyers, we will cover all of your legal fees and you won’t have to pay for anything on your side. Our service is completely free.
We are members of The Property Ombudsman and the National Association of Property Buyers, which means we follow a strict set of guidelines when dealing with customers. As a result of our membership, great customer care is one of our core values, which is why we have thousands of excellent reviews on Trustpilot, and why we are the UK’s most rated cash buyer.
Selling your house Below Market Value with us, means you get a guaranteed cash offer within 24 hours of signing up, and then we tailor the service around you. If you need to sell in 7 days, we will facilitate this, or if you need to sell in 3 weeks, we can cover this too.
Want to find out how much we will offer for your home? Put your postcode into the form below and we will get in touch with you.
Frequently Asked Below Market Value Questions
Do I pay solicitor fees if I sell Below Market Value?
Yes, you will still need to pay solicitor fees when selling a house Below Market Value. The fees cover the conveyancing side of the house sale, regardless of the sale price. However, if you sell your house with The Property Buying Company, we cover all the fees associated with selling your house.
Do you always make a profit when you sell your house?
No, you don’t always make a profit when you sell your house. Market conditions, the property’s condition, and the original purchase price all affect whether you make a profit or incur a loss.
How do you sell Below Market Value?
In order to sell a Below Market Value, you can use an online property auction, an independent cash investor, sell to a family member or friend, or sell directly to us. All you need to do is fill out our postcode form below, we will contact you with a cash offer and if you accept we will do the rest. We will even cover all the legal costs associated with selling your home.
Is Below Market Value property the same as affordable housing?
No, Below Market Value properties and affordable housing are different. BMV properties are sold at a lower price than their market value, often for a quick sale or to help a family member. Affordable housing on the other hand are typically part of government programmes aimed at providing housing at reduced costs to low-income families.
What is a sale at undervalue Capital Gains Tax?
A sale at undervalue refers to selling an asset for less than its market value. For Capital Gains Tax purposes, HMRC might treat the sale as if it occurred at market value, calculating CGT based on the market value rather than the sale price.
Can I sell my house to my daughter for less than market value?
Yes, you can sell your house to your daughter for less than market value. However, you will need to consider possible tax implications, if you need further assistance, contact a financial advisor.
Is selling Below Market Value a bad thing?
Selling a house Below Market Value isn’t inherently bad; in fact, it can be a practical solution if you need to sell your house quickly. Various circumstances, such as divorce, repossession, financial struggles, relocation or inheritance can make a property burdensome. In these situations selling Below Market Value can be the easiest and most efficient way to offload the property.
While the primary downside is that you may lose out on 15% to 25% of the market value, this can be offset by several factors. Holding costs, solicitor fees, estate agent fees, and council bills can add up over time, potentially making a quick sale at a reduced price more financially viable in the long run.
Do buyers prefer lower prices to higher prices?
Yes, buyers generally prefer lower house prices as it means they can buy the property more affordably, potentially leaving more room in their budget for renovations or other expenses.
What is the best way to sell a house Below Market Value?
The best way to sell a house Below Market Value is through a cash house buying company like The Property Buying Company. We are one of the UK’s leading cash buyers and can buy your house in as little as 7 days. We will pay around 75% to 85% of your market value and cover all your fees.
What is under the market value?
Under Market Value, similar to Below Market Value, is where a property is priced lower than its true market value. It is often used in the context of fast house sales.
Are you allowed to sell a property below market value?
Yes, you are legally allowed to sell a property below market value, however you should ensure you don’t owe anything on your mortgage to avoid negative equity.
Here at The Property Buying Company, we will never put you in a position where you have to enter negative equity.
What company will buy my house Below Market Value?
There are several companies on the market that will buy your house Below Market Value, but The Property Buying Company is by far the best. We can offer you a guaranteed cash offer, helping you to sell in as little as 7 days.
We can cover all of your legal fees and we are the UK’s most rated cash buyers, helping thousands of people move house over the past 12 years of business.
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