Transfer of Equity

A Transfer of Equity is used when an owner wants to add or remove people from ownership of a property, as long as it is not the owner themselves.

Transfers are different from sales because with a Transfer at least one of the original owners must remain on the title. Generally, with a Transfer of Equity a contract is not involved, but searches may be performed if there is a mortgage and the lender requires it.

When might you want to transfer equity?

  • Your relationship status changes. At the start of a relationship you might want to add a partner to the title of the property, or at the end someone might need to be removed. In the latter case, if one party wishes to remain in the property they sometimes “buy out” their former partner. The remaining partner would take on the full responsibility for any mortgage.
  • Investing in property. If you are investing in property with other parties, you might need to change the equity distribution to reflect the ‘share’ owned by each party.
  • Gifting property. You might want to gift a share of a property to a child or other family member.

If there will be multiple owners after the transfer is completed, the owners need to decide whether the property will be held as tenants in common or beneficial joint owners. We can advise on this if you need help.

Transfer of Equity process

Initially, we obtain the official copies of the Register of Title to check property owners, restrictions and charges. Any third parties with an interest will be notified (i.e. a mortgage lender). Any mortgages or remortgages involved will be dealt with. We will prepare the Transfer of Equity Deed for signature, then once signed will register it at the Land Registry.

Stamp Duty Land Tax might be payable if there is any consideration being contributed. We’ll let you know if this applies to you.

Transferring equity in a property with a mortgage

If the property is mortgaged and this is not being repaid, the lender must provide written consent before a transfer can be completed. New owners of the equity become jointly liable for the remainder of the mortgage. For owners to be removed, the mortgage lender must provide consent again as they need to determine whether the remaining owners can afford the mortgage.

If the mortgage is being repaid, either through remortgage or consideration from a new owner, this needs happen on completion. If this doesn’t happen, the lender will not allow the transfer to be registered.

Is there any Stamp Duty Land Tax to pay?

Sometimes. If there is any money changing hands, then SDLT will most likely be applicable. The consideration for tax is not the full value of the property, but the amount of money changing hands. The standard SDLT rates apply. If property is gifted in a will, or if a property is split up due to a relationship breakdown or court order, then SDLT does not apply. There are a few other scenarios where SDLT isn’t payable, but you should seek advice on this to avoid any tax problems.

Contact us

If you’re in a position where you need to conduct a Transfer of Equity, please contact us. Note that we are not allowed to act for both incoming and outgoing owners in a transfer.