Transfer of Equity Solicitors & Process

‘Transfer of equity’ is a legal term describing the process of adding or removing someone from the title deeds of a property – that is, changing who is listed as an owner.

There are a number of common reasons why you may need to change the ownership of a property by adding or removing an individual as a legal owner.

• Joint owner buyout: It’s increasingly common for homeowners to purchase with friends or family. You might be wanting to purchase their share.

• New relationship: Perhaps the property was bought by one person and is now to be put into joint names.

• Relationship breakdown: You may have separated from your partner and one of you is planning to remain in the property. A new partner may be added to the title deeds, replacing the other, or adult children could be added.

The transfer of equity process can intertwine closely with family law and wills and probate.

The transfer of equity process explained

‘Equity’ refers to the percentage of the property that is owned – so the value of your property minus any outstanding mortgage balance. If someone gives up their ownership, they will be due their share of this equity.

Equity can be split in any way; the most common for a couple, for example, is 50/50. A property cannot have more than four legal owners, but the transfer of equity process can include as many people as desired.

When all parties are in agreement, transferring the equity is typically a straightforward process, especially if there is no mortgage involved: unlike with the purchase of a property, one party remains in ownership and there are usually no conveyancing searches required.

If there is a mortgage outstanding, you’ll need the consent of the lender or, alternatively, you will need to re-mortgage at the same time as the transfer of equity.

If someone is leaving the property, the remaining party will usually need to ‘buy’ the other out. This most commonly involves remortgaging with the existing lender, which could entail affordability checks. The person being removed will be absolved of their mortgage obligations and will receive any consideration which may have been agreed to be paid for their share of the equity.

A transfer of equity could also be classified as a gift, in which case no money would change hands.

Each transfer of equity case must be assessed individually.

Transfer of equity: stage-by-stage

1. Title deeds review: Before the equity transfer, an official copy of the property’s title is obtained from the Land Registry. This will be checked for any mortgages or other restrictions. The parties’ identities will also be reviewed.

2. Preparation: The transfer deed is a legal document drafted by your solicitor. The most common transfer deed is the TR1 form.

3. Notification of third parties: Any third parties in the process, such as mortgage lenders, banks or building societies, must be notified and their consent obtained. If there is a management company involved, it may also be necessary to obtain details of their transfer of ownership requirements.

4. Signing: the transfer deed will need to be signed in the presence of a witness. Other documents may also need to be signed at this stage.

5. Land Registry: The transfer deed, together with any mortgage deed, if required, are then registered with the Land Registry. This will incur a fee based on the value of the property.

The process can take around six-to-eight weeks to complete. If there is a mortgage involved or a wider dispute, this can take longer. You will be advised accordingly based on your circumstances.

Fees involved with transfer of equity

The fees involved with a transfer of equity always include Land Registry fees (based on the value of the property) and solicitor fees. Stamp Duty Land Tax may also be applicable.

There may also be costs involved with remortgaging including the need for conveyancing searches. Other smaller costs associated with transfer of equity may include bank transfer fees and ID checks.

Transfer of equity: stamp duty implications

If an interest in a property is transferred to you, you may need to pay Stamp Duty Land Tax. The government’s Stamp Duty Land Tax transfer of equity page gives a thorough run down of various different scenarios, including this example:

• A homeowner has a property worth £700,000. There is an outstanding mortgage balance of £600,000.

• They wish to transfer half of their equity to a new owner for no consideration payable. The new owner takes on half of the mortgage (£300,000). This is called the ‘chargeable consideration’.

• Stamp Duty Land Tax is applied to this new share. The amount is £5,000 (0% of the first £125,000 + 2% the next £125,000 + 5% of the next £50,000).

If the chargeable consideration falls below the current Stamp Duty Land Tax threshold, or the transfer is classified as a gift, there’s no Stamp Duty Land Tax to be paid. Furthermore, if someone acquires a property as a result of divorce or inheritance, then no Stamp Duty Land Tax will be payable.

Of course, the amount to be paid depends entirely on your circumstances. Our team will be able to provide bespoke legal guidance.

How our solicitors can help you with transfer of equity…

We are experts in all matters relating to the ownership of properties and transfer of equity. We tailor our advice to your individual circumstances, from informing an incoming owner of the legal title, to advising outgoing owners that their name has been removed from the mortgage account.

We can also assist with obtaining consent from mortgage lenders or simultaneously re-mortgaging and changing lenders.

Trust our award-winning conveyancing team

Our specialist conveyancing team can work flexibly to suit your requirements, whether you would prefer to meet in person, speak on the phone or liaise by email.

Rated as ‘Excellent’ on Trustpilot, we’re proud to have built up an enviable reputation over many decades by offering our clients second-to-none customer service.

We are clear on our costs from the outset, providing you with a bespoke quote based on the legal work anticipated for your individual case. We will provide clear, concise and regular updates throughout the transfer of equity process.

We can also inform you of other costs payable to third parties. This could include Stamp Duty if you are contributing to a purchase, or registration fees payable to Land Registry.

Get in touch

For expert legal advice and assistance around transfer of equity from our specialist conveyancing team, call us on 0113 264 4414 or complete our website contact form.