Selling a property below market rate?

How many of you have seen these ‘we buy anything, anywhere’ companies? I think it is fair to say most landlords would not even consider them – WELL

I have just sold for the second time a property at under market rate, and I am not the least bit concerned.

Here is my reasoning:

Currently on the estate where the property is, I drove around and there are 18 , yes EIGHTEEN 2-bed properties for sale. I had a chat with the local estate agent and asked for an HONEST opinion. She said that properties that had sold are going through no problem BUT for new sales the market is pretty much frozen as people are hanging on to see what is in the budget, and as that is not till November 26 nothing will sell till at least then.

I could have put it in an auction, but you still need the searches, which are taking two months or more to come through, and there would still be auction fees to pay. Possibly you could have made more, possibly less, and you have to wait for an auction date, likely six weeks.

I looked at one of those ‘we buy tenanted properties’ companies – well actually, they don’t, they are just middlemen who will try to sell it and take a commission. (irrelevant anyway as tenant has now moved out)

So, by selling to one of the ‘we buy anything, anywhere’ companies, the estimated selling price was £160,000. They offered me £136,000. These companies pay your solicitors fees and expenses, no searches are required and money is in your bank in 14 days.

Here are the finances:

Saving on estate agents fees (likely 1.5%) £2400
Saving on solicitors fees (1% at best) £1200
Saving on not having to have the house redecorated £1500

The thing that people forget is that by reducing the price to £136,000 then I would have £24,000 of ‘gain’ on which I would not have to pay tax, in fact, that would mean as I purchase the property for £37,500, I would have a gain of £98,500 to pay CGT on.

So as I have other income coming in from other sources I can ‘engineer’ my income so rather than 24% CGT I only pay 18%

Yes, I will still receive less on the whole transaction, but on balance I don’t have to pay insurance, electric, mow the lawns and I have got rid of it and money in the bank.

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