Are there rules about the price to sell your house?
The question about whether you can sell your house for any price you want is a double edged sword. The two sides to this sword are: On the one side the property market and supply vs demand. And on the other side is the buyer and what they are prepared to pay.
But can you sell your house for any price you want? The answer is yes you can sell your house for any price. But the top end price is governed by the market. There’s nothing to stop you from selling your house for any price that a willing buyer is prepared to pay for it. This is true even if that price is either above or below your home’s fair market value.
However, in selling your home at below market value, you need to be sure you have sufficient proceeds to satisfy any outstanding mortgage.
There are two sides to this question. The first is about selling your house for under market value. The second is attempting to sell your house at over market value.
There’s absolutely nothing to stop you from selling your house for any price that a willing buyer is prepared to pay for it. After all, any home will sell at a price where there’s a willing buyer and a willing seller.
With your home in the UK, there’s no law that restricts you from selling your house at any price below market value. In other words, at any price you want.
There are many reasons why you might want to sell your home at under value. But at the end of day, the choice is yours to make.
Mortgage needs to be paid off when you sell your house
When you sell your house, and where you have an outstanding mortgage secured on your home, you need to repay the mortgage in full before you can sell it (but see property lease options). The amount outstanding on your mortgage is your restriction on the bottom line figure for what you can sell for.
In order to transfer ownership, your mortgage needs to be repaid in full.
Unless you have additional savings to pay any balance left over, you can’t really sell your house for less than the mortgage amount.
If however you no longer have a mortgage, selling your house at below market value is no longer restricted at all. If the mortgage has already been paid off, you can sell your home for whatever value you like.
Yes you can sell your house for just £1. But £1 is the absolute minimum amount the consideration needs to be in order to create a binding contract. One method to arrange a house purchase for just £1 is to use a lease options arrangement where the option fee is just £1.
In other words, for the contract to work, money needs to change hands. With the minimum being £1.
If the circumstances are such that both parties agree for the option fee to be just £1, the transaction can go ahead.
But if we’re not talking about a lease option transaction, the only way in which you could sell your house for just £1, is if you don’t have an outstanding mortgage secured on the property.
Can you sell a house to a family member for cheap?
There’s nothing preventing you in the UK from you selling your home to a family member for less than the fair market value. This can be to one of your sons or daughters or indeed any other family member.
The under valued element will be treated as a gift. You may need to look into the Inheritance Tax rules of gifts of this nature.
The only thing that could prevent a transaction with a family member at under market value is any outstanding mortgage. Before any transfer of a property to a family member on the cheap, the mortgage needs to be cleared first.
Attempting to sell your house at over market value
On the other side of the above coin is attempting to sell your house at over market value. With this scenario, it’s unlikely to work. It’s very unlikely that anyone would want to pay an over market value price for your home.
Really this is market forces at play, where the market is trying to find the right market value. It’s about supply and demand. Where demand outstrips supply, prices go up.
Can you choose who you sell your house to?
You can sell your house to whomever you want. In making your choice of buyer you should not necessarily agreed to the buyer with the highest offer.
Consider instead whether they are a cash buyer or in a sales chain, whether or not the buyer has found a buyer for their property and how long their conveyancing chain is.
How much money do you keep when you sell your house?
How much money you keep when you sell your house depends on how much you owe on your mortgage and how much your selling costs will be. Selling costs include estate agent’s fees and legal fees.
But you may not get to keep any of your money if you are buying another house, as your money will be put towards this purchase.
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Can I Sell My House For Any Price I Want? (What Are The Rules?)
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Article written by Russell Bowyer who has been investing in property since purchasing his first commercial property in the 1990's for his own Chartered Accountancy business. But his first property investment project was to turn an old dilapidated restaurant into a large 5-bed home, which he purchased for £117,500 and sold for £450,000 (to see an "after" photo of the house before it was sold see here: About). Russell owns a number of investment properties, which includes houses, flats and HMO's. More recently he has turned his creative side to investing in property using lease options. His largest lease option deal to date was to acquire 12 properties worth over £2 million for just £12, which means he paid just £1 to acquire each property!
6 thoughts on “Can I Sell My House For Any Price I Want? (What Are The Rules?)”
If the house is sold for less than market value, does it count as a gift for tax purposes?
The answer to your question depends on who you are selling it to for less than market value. If you sell it in an arm’s length transaction to an unconnected third party then no it will not be a gift. But if you gift it to a spouse or civil partner you lived with for at least part of the tax year in which the gift was made there is also no capital gain either.
Hi. Can I sell my home to my son for the value of what is left owing on the mortgage please. My x wants to sell it at fill market value but initially it was gifted to us and we took out a small mortgage. I dont want to make a profit I just want to keep it in the family. Regards kim
Thank you for your comment and question. You can sell your property for any price you like, as long as both parties (i.e. you and your son in this instance) agree to. There will be other costs to take into account like Stamp Duty, conveyancing costs etc, but you will save on estate agent commissions which is good. Whether your son wants to carry out searches and a survey will be up to him of course.
The may be tax implications in the future from an inheritance tax perspective, so you may need to seek advice on this front, but so long as the mortgage is paid off when the property is sold to your son the lender will be happy too.
I don’t think you’ll have a Capital Gains Tax problem, as I am assuming this is a property that you have lived in as your Principle Private Residence or PPR too.
I live on a houseboat and due to old age would like to sell it to my sister and her husband at around half price of estimated valuation (£30000) to keep the boat in the family. I claim pension credit and housing benefit for the mooring fees. Will the amount I sell it for or the estimated full value be used to calculate my future entitlement to benefits.
Hi, thank you for your question and comment – I’m afraid I don’t know too much about housing benefits – I suggest you speak with your local housing benefits person or check the Government website for more details, sorry.
If the house is sold for less than market value, does it count as a gift for tax purposes?
Hi Liz, thank you for your comment and question.
The answer to your question depends on who you are selling it to for less than market value. If you sell it in an arm’s length transaction to an unconnected third party then no it will not be a gift. But if you gift it to a spouse or civil partner you lived with for at least part of the tax year in which the gift was made there is also no capital gain either.
Russell
Hi. Can I sell my home to my son for the value of what is left owing on the mortgage please. My x wants to sell it at fill market value but initially it was gifted to us and we took out a small mortgage. I dont want to make a profit I just want to keep it in the family. Regards kim
Hi Kim,
Thank you for your comment and question. You can sell your property for any price you like, as long as both parties (i.e. you and your son in this instance) agree to. There will be other costs to take into account like Stamp Duty, conveyancing costs etc, but you will save on estate agent commissions which is good. Whether your son wants to carry out searches and a survey will be up to him of course.
The may be tax implications in the future from an inheritance tax perspective, so you may need to seek advice on this front, but so long as the mortgage is paid off when the property is sold to your son the lender will be happy too.
I don’t think you’ll have a Capital Gains Tax problem, as I am assuming this is a property that you have lived in as your Principle Private Residence or PPR too.
I live on a houseboat and due to old age would like to sell it to my sister and her husband at around half price of estimated valuation (£30000) to keep the boat in the family. I claim pension credit and housing benefit for the mooring fees. Will the amount I sell it for or the estimated full value be used to calculate my future entitlement to benefits.
Hi, thank you for your question and comment – I’m afraid I don’t know too much about housing benefits – I suggest you speak with your local housing benefits person or check the Government website for more details, sorry.