If you want to change one of the registered owners of a property by adding or removing someone from the title deed, this is done through a legal process called Transfer of Equity.
A transfer of equity is not the same as putting a house on the property market and selling it, because usually at least one party will remain as the owner.
In this blog, our property team looks at the equity transfer process and highlights considerations such as Stamp Duty Land Tax (SDLT) and Land Registry Costs. They also answer a few frequently asked questions about changing the co-ownership of a property.
Why is Transfer of Equity Used?
There are various reasons why a transfer of equity is used over simply selling the property to a new owner. They include:
- Adding a spouse or partner to the title after marriage, a civil partnership, or moving in together
- Removing an ex-partner from the title following a separation or divorce
- Changing the shares in a jointly owned property
- Gifting a share to a child or other family member
- Estate and inheritance tax planning
Typically, in each of these cases, at least one of the original owners stays on the title. However, transfer of equity can also be used if you are buying out someone’s entire share, or transferring the whole property to a single person, for example, due to a divorce or for inheritance planning reasons.
The Transfer of Equity Process
Like all property transactions, each case is a little different, but most ownership transfers include similar steps and requirements. Below, we set out the main stages of the transfer of equity process and how our team would help:
- We obtain a copy of the title from HM Land Registry and review it, checking for anything that affects the transfer, such as an existing mortgage or a restriction on the title.
- We prepare the transfer deed, the legal document that gives effect to the change in ownership.
- If there is a mortgage, the mortgage lender, bank, building society, and any other relevant third parties will be informed. The person leaving the title will usually need to be released from the mortgage, and the lender must give its consent before the transfer can go ahead. You cannot simply remove someone from the deeds while they remain tied to the loan.
- The parties sign the transfer deed, with the signatures witnessed, so the document is legally binding.
- We register the change with HM Land Registry, pay the registration fee on your behalf, then send you confirmation once the title has been updated.
Stamp Duty Land Tax Implications: Transfer Ownership of Land or Property
Stamp Duty Land Tax (SDLT) can apply to a transfer of equity, but only where there is what HMRC calls “chargeable consideration”. In simple terms, this means when all or part of an interest in land or property is transferred to you, and you give anything of monetary value in return. This could be a cash payment for the share, or the new owner taking on a portion of the existing mortgage.
The key point is that SDLT is calculated on the consideration, not on the property’s full market value. So, if your partner takes on £100,000 of the mortgage when they are added to the deeds, SDLT is assessed on that £100,000, and as it falls below the current £125,000 nil-rate threshold, there would be nothing to pay. Where the consideration is £40,000 or more, an SDLT return must still be filed with HMRC within 14 days of completion, even when no tax is due.
A few situations are treated more favourably:
- Transfers between spouses or civil partners who are living together are generally free of SDLT where no consideration changes hands, and the additional-property surcharge is also disregarded.
- A transfer made as part of a divorce or separation, under a court order, or a formal written agreement, is exempt from SDLT regardless of the value involved.
- If the transfer is a gift and there’s no chargeable consideration, Stamp Duty Land Tax does not normally apply.
On the other hand, if the person receiving a share already owns another property, the higher rates for additional dwellings may apply. SDLT rules and calculations can be fiddly, and the right answer depends on your circumstances, so it is always worth talking it through with an experienced professional first.
Further guidance about when SDLT is payable can be found via the government website: GOV.UK: SDLT Transferring Ownership of Land or Property.
Land Registry Fees and Other Costs
Just like other property transactions, a fee is payable to the HM Land Registry to register the transfer. The cost is set on a sliding scale based on the value of the transaction, so the exact figure depends on your property. We always set out any third-party fees (known as disbursements) clearly in any quote alongside our own fees. We ensure there are no hidden costs, and you will always know what you are paying before any work begins. For a guide to transfer of equity costs, see our fees page, or use our conveyancing quote calculator.
Frequently Asked Questions About Transfer of Equity
How long does a transfer of equity take?
The average transfer of equity can take between 4 and 8 weeks, though timing depends on factors such as whether there is a mortgage to deal with and how quickly the lender gives its consent. We will give you a realistic idea of timescales at the outset.
Do I need a solicitor for a transfer of equity?
If there is a mortgage on the property, your lender will almost always require a solicitor to act, and the lender’s consent and the Land Registry paperwork need to be handled correctly. Even where there is no mortgage, having a regulated legal professional protects you from errors that can be expensive to unpick later.
Can I remove someone from the deeds if there is still a mortgage?
Not on your own. The mortgage is secured against the property, so the lender has to agree to release the departing owner and, usually, to the remaining owner taking on the loan. We can help manage that with your lender as part of the transfer process.
Will I have to pay Stamp Duty?
Only if there is chargeable consideration, such as a cash payment or a share of the mortgage being taken on, and only where that figure is above the current threshold. Many straightforward transfers between spouses or civil partners involve no SDLT at all. We will tell you where you stand before you proceed.
Conveyancing Services in Alton
If you need further information about transfer of equity, or any other property services, our experienced conveyancing team would be happy to help. Bookers & Bolton is a Conveyancing Quality Scheme accredited firm and can provide specialist conveyancing services on a wide range of residential and commercial property matters.
We will guide you through the entire process, expertly taking care of the necessary stages to ensure your transaction progresses efficiently and as quickly as possible.
Get in Touch
For legal advice from experienced residential conveyancing solicitors, please contact us on 01420 558 335, email enquiries@bookersandbolton.co.uk, or fill in an enquiry form today.
This blog post is for information purposes only, and the tax position on a transfer of equity depends entirely on your individual circumstances, and rules may have changed since publication. This blog is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors.
