Transfer of equity conveyancing.
Whether you're adding a partner to your property's deeds, buying out a co-owner, or gifting a share of your home to a family member, you'll need to complete the legal part of the process - known as a 'transfer of equity'.
What is a transfer of equity?
A 'transfer of equity' is when an existing owner of a property (or land) adds or removes one or more people to the title (ownership) of the property, or transfers full ownership of the property to another person.
You might, for example, wish to transfer equity if you decide to:
- Sell your share in a property
- Buy out an ex-partner after a separation
- Buy out a joint owner
- Adding a new partner or spouse to the deeds of your home
- Gift a property (or share in a property) to a child or other family member
You may also need to transfer equity to reduce the value of your estate when estate planning for Inheritance Tax (IHT) purposes.
See also:
How do I gift my property to my children or a member of the family?
How do I remove someone from a property deed?
Will I need a conveyancing solicitor when transferring equity?
Yes, if you are transferring equity on a mortgaged home, you will need a solicitor to carry out the legal work needed to complete the transfer.
If there is no mortgage, then you don't necessarily need to use a conveyancing solicitor. The process is complex, however, and there could be tax implications if you make an error. Transfer of equity conveyancing fees are inexpensive, so most people prefer to use a solicitor or licensed conveyancer.
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What's the legal process of transferring equity?
Your conveyancing solicitor will work closely with all parties involved in the legal transfer, including the mortgage lender (if there is an existing mortgage).
The legal process will include:
- Obtaining and reviewing the title deeds
- Transfer deeds and other legal documents are drafted and completed
- Third parties, including mortgage lenders, banks, building societies and landlords, are notified and relevant consents obtained
- The new deeds are signed and witnessed
- The new interests in the property are registered at HM Land Registry (HMLR)
Read more:
The transfer of equity process explained
What if there's a mortgage on the property?
If there is an existing mortgage, the lender will need to consent to the transfer of equity.
You want to add someone to the deeds if, for example, you are getting married, entering into a civil partnership or moving in with a partner or friend. In this case, the person being added to the deeds will become equally liable for the mortgage.
If you are removing someone from the deeds, the mortgage lender will need to confirm that the remaining owners will be able to pay the mortgage.
If the mortgage lender does not consent to the transfer, the mortgage will need to be paid off, either in cash or via a remortgage.
Your solicitor or conveyancer will need to be on the lender's approved panel of conveyancing solicitors. Our panel of solicitors is approved by over 100 banks and building societies. You will be assigned a conveyancing solicitor who can act for your existing mortgage lender.
What if I am remortgaging at the same time?
You may be remortgaging the property when transferring equity. The legal work for your remortgage can be completed at the same time as the legal work for your transfer of equity.
Read more:
How to transfer equity in a property with a mortgage?
Do I pay Stamp Duty Land Tax (SDLT) on a transfer of equity?
When transferring equity held in property or land, Stamp Duty Land Tax (SDLT) is payable on the 'chargeable consideration'.
When buying a property, chargeable consideration is the amount of money a buyer pays for the property.
However, when equity in a property is transferred from one person to another, chargeable consideration is the amount of debt transferred or taken on.
SDLT would, therefore, normally be payable on the amount of the mortgage being taken on by the new owner.
If you are transferring equity in a second property, the Second Home Rate may apply.
Read more:
Transfer of equity Stamp Duty calculator
FAQs
How is the property valued when transferring equity?
The value of your equity in a property would be calculated as follows:
(Current Market Value - Outstanding Mortgage) x % Share in the Property
In some circumstances, you will need to get the property professionally valued as part of the transfer process.
If you are separating from a partner, for example, you would probably need to obtain a valuation. If you need to pay Capital Gains Tax (CGT) you will also need to professionally assess the property's value.
You would normally obtain an independent property valuation through a chartered surveyor.
We can arrange an independent valuation with a RICS chartered Surveyor as part of the process.
How long does the transfer of equity process take?
The conveyancing for a transfer of equity usually takes around 4 weeks.
If there is an existing mortgage, or if you are remortgaging the property at the same time, the process can take longer - depending on how responsive the lender is.
Leasehold transfers can take longer if, for instance, the freeholder (landlord) is unresponsive. If you intend to transfer equity on a leasehold property, we recommend that you notify the freeholder as early in the process as possible. Otherwise, your solicitor will prioritise notifying your freeholder at the start of the process.
