Perhaps they split the previous house out into its own plot and sold it separately.
It'll start out at £300k (to market it attractively) and end up selling for £500k+.
I once came across a middle-of-nowhere midwestern house auction listing by the US government. It came with a detached 5-vehicle garage, and an attached multistory underground hole I assumed was a missile silo. I can't remember the exact starting price, but it was significantly lower than $400k IIRC.
You can get these types of things sorted (eg apply for retroactive planning permission) and the council will send a surveyor and give you an opinion but you are running the risk that they insist you either make it good (remedy anything they don't think was done right) or (worst case scenario) tell you to put it back like it was before the unpermitted work was done. This happens more often than people think.
That's why the house has been reduced in price so much - to find someone who feels like the headache is worth it. I have my doubts to be honest.
However, I think you're right that no bank will lend. They expect only a cash buyer who can "regularise" it and sell it on at considerable expense. Hence the price.
Apparently they have planning permission approved already to build houses on this land.
"Real" liability of the "if something happens I'm on the hook" kind is not what's driving down the value here. What's driving down the value is that now that there's a bunch of pictures floating around the internet the tunnels are worthless because some government inspector could choose on a whim to force you to fill them in at your expense (which you would presumably fight, expensively, in court).
EDIT: oops, forgot to select the 'Bungalow' filter too (ugh). 2 properties: £375k and £350k (very small, 60m2). Still...nothing detached around £300k
EDIT2: ohh auction...230m2...yeh won't go for £300k, way more
Detached sounds funny, as if the house was previously attached to another but not anymore. Like how you can only be divorced or widowed after being married to someone.