You might be thinking about selling your house for less than what it’s technically worth. Maybe it’s to help out a family member. Maybe you just want a quick sale and don’t fancy the drawn-out process. Whatever the reason, selling a property under market value is possible, but it’s not as simple as just knocking off a few grand and calling it a day.

There’s more to it than that, and not just in terms of money. There are legal angles, tax issues, and even family dynamics to consider.

First, What Do We Mean by “Market Value”?

Market value is what your house would reasonably sell for based on current conditions. That includes things like location, recent sales in the area, condition of the property, and so on. An estate agent or surveyor would usually help set that figure.

Now, that number isn’t always fixed in stone. It’s more of an educated estimate. But once you go significantly below it, you’re stepping into slightly different territory.

Can You Actually Sell Below Market Value?

Yes, absolutely. You’re the owner, and you can choose to sell for any amount you’re willing to accept. The law doesn’t stop you from taking less money. People do it for all sorts of reasons. Selling to family, helping someone get on the ladder, or avoiding estate agent fees and delays.

But while you can, there’s a difference between being allowed to and being wise about it.

Why Would Someone Do It?

Let’s say you want to help your son or daughter buy their first place. Maybe the market value is £250,000, but you’re happy to take £200,000. That’s considered a “sale under market value” or what’s often called a “gifted equity sale.”

Another reason might be speed. Maybe your house has been sitting on the market for ages and you’re sick of waiting. A lower price might attract cash buyers or people looking to avoid mortgage chains. It’s not ideal from a profit standpoint, but it might suit your situation.

And sometimes, it’s just emotional. A long-time tenant might be looking to buy, and you want to give them a chance without pushing the price up.

But Here’s Where It Gets Complicated

The biggest snag people hit is tax. HMRC doesn’t just look at what you sold the house for. If you’re giving someone a “deal,” the government might still treat the transaction as though it was at full value.

Capital Gains Tax (CGT)

This one applies if the property isn’t your main home. If it’s a second property or a buy-to-let, and you sell below market value, you might still be taxed as if you sold at the higher figure.

Say the house is worth £250,000 but you sell it to your nephew for £200,000. HMRC could still expect you to report gains based on the £250,000 value. That could mean a larger tax bill than you’d planned.

Inheritance Tax (IHT)

If you sell to a family member for less than market value and then pass away within seven years, the difference might be treated as a gift. And gifts can count toward inheritance tax.

Again, this won’t always apply, especially if you live for a good number of years after the sale, but it’s something worth keeping in mind. There’s a “seven-year rule” that affects how gifts are taxed after death.

Mortgage Lenders Might Not Like It

If the buyer is getting a mortgage, things can get tricky. Most lenders want to know the full story. If the buyer is paying significantly less than market value, the lender might see that as risky.

They may ask for a gifted deposit letter or even refuse the mortgage unless everything’s properly declared. Transparency here is key. Trying to cut corners can lead to delays or refusals.

Legal Advice Isn’t Optional Here

Selling under market value comes with a lot of moving parts. You’ll want a good solicitor, someone who can guide you through potential tax implications and make sure everything is properly recorded.

You’ll also want to get a professional valuation. Even if you’re giving someone a deal, it’s useful to have documentation showing the actual market value. That helps keep HMRC on the right page and makes things clearer for everyone involved.

Think About Future Impacts

Let’s say you sell your house cheap to your daughter today. That might seem generous, but what if she sells it a year later for full value? Technically, she profits from the gift you gave her. That’s fine if you’re comfortable with it, but in families, it can sometimes create tension, especially if other siblings feel they’ve missed out.

In my experience, clear communication and a formal agreement can save a lot of grief later on. You don’t want people guessing at your intentions after the fact.

Also, if you’re currently on certain benefits that are means-tested, giving away a large asset or selling it under value might affect your eligibility. The authorities can treat it as “deliberate deprivation” of assets.

It’s Not Just About Numbers

Sometimes it comes down to what feels right. Maybe you’re selling to your best mate who’s helped you renovate the place. Maybe you want to reward a loyal tenant. That’s your call.

But even if your motives are kind-hearted, it’s worth pausing to look at the broader picture. A good deal shouldn’t come back to bite you.