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Nicola has asked me to look at this question for you. I have been off-line and that explains the delay. I apologise for the wait.
This is potentially problematical for you if your grandmother goes into care. The whole of the property is at risk apart from the last £23,000.
Therefore, your purchase at £200,000 would be a sale undervalue and of more than £200,000 was needed to pay for your grandmother’s care, the local authority would insist that the property was sold. What you have been told at point 2 is correct.
Stamp duty would be based on the purchase price.