to wonder why this house was so cheap?

[user1498911589]

A house in the next road was sold about 6 months ago, the same person is still living there and the sale price was £10,000. We're about to put our house on the market so I was looking to get an idea of what others had sold for.

Why would a house, even with a sitting tenant, sell for this little?

The elderly man will have sold it to his family to avoid tax.

user1498911589 Yes he would have to pay market rent.

We have something similar when you look up our house as we bought it, then a few years later bought extra land to extend the garden, so now looks like we sold the house at a ridiculous price. There are many reasons why this could be the price it looks like it was sold for, I would guess maybe equity release or a family arrangement. Unless it is an ex council house and was purchased at knock down price due to tenant being in place so long??

I don't think selling a property cheap to a relative helps reduce inheritance tax or CGT, but a quick google seems to indicate that it may work for avoiding stamp duty.

The elderly man will have sold it to his family to avoid tax

That seems the most likely scenario. My mother is/was all over this kind of stuff (we're NC) and wanted to sell her house to my sister for next to nothing so if she needs to go into a home when she's older, she'll get it paid for by the state.

To avoid heritage tax but person has to live for 7 years.

Yes - I wonder if some posters are maybe confusing inheritance tax, which is time related, i.e. if the donor survives for more than 7 years after the gift then there is no IHT, with transferring the interest to avoid care home fees or similar. In the latter case, the original owner would have to be paying market rent or other valuable consideration, otherwise it can be clawed back, I think.

It could be related to that specific property eg if its unmortgageable; if it was re-possessed by the mortgage company but the new purchasers let the old owner stay on as a tenant, etc.

tenbob I didn't realise this.

This particular community must still find some kind of loophole as its zone 2 in London and prices are very low compared to a few streets either way where the community is not as much of a majority.

Either that or the knock on effect from this loophole is prices still being effected by when they were sold during the period people were still doing this.

You can sell your house for whatever you want however that alone usually isn't enough to avoid tax. Possibly the house is a leasehold and has very few years left on the lease or something like that?

It could be that the house has been let out on a tenancy that pre-dates ASTs. The rent cannot be changed easily and the tenant has security of tenure - sorry, I can't remember the name of the kind of tenancy. They are notoriously difficult to sell so it may have gone for a song to the only person who was able/prepared to keep the existing tenant on.

The purchaser may have taken the long-term view that the tenant would not live for more than 5 years and s/he would then have a property they could let out at a market rate for peanuts.

AnitaLovesVictor you are wrong, absolutely they can.

I meant after the person has died - to avoid inheritance tax. You are right that as long as the person lives for 7 years you can.

Was it bought cheaply off the council? Or maybe an admin error on the price?

It's a privately owned freehold house, it's not a former council house, no and it won't be a bit of the garden as it's far too small to put another property on. Normally the houses round these roads go for 300-350k.

Perhaps the vendor and the buyer did a house swap and the £10k is the difference in value between the two properties.

A local agent may know the answer to your query, OP, but I think looking at the Land Registry is your best best, it's only a few quid and you get the property info online.

It could be the man living in it is on an old, pre-AST rental agreement that is near impossible to terminate.

A rent act tenant would reduce the value but not from £350k down to £10k. It's usually between 25-50%. This sounds like a family sale to me, but only the docs from the land reg would shed more light.