The owner can offer the house at whatever price he/she wants....why do you think otherwise?
If I want to offer a two bed flat in Birmingham for £5 million, no-one can force me to sell it at 'market value' since it is mine to sell and not yours to buy.
If I owned the property, I wouldn't accept your argument of a depressed market value due to having a regulated tenancy, since a family member is buying the house. I would know that the house would be worth full market value to you, since you are going to scrap the regulated tenancy at your choosing in the future.
If you were a third party investor then your argument would stand since you would have no ability to change the house from being under a regulated tenancy, but as a family member...I'd tell you try again.
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