Transfer of Equity

A transfer of equity is a legal process in which ownership of a property is changed by adding or removing one or more people from the property’s title deeds, but without a full sale of the property. This can happen for several reasons, such as a relationship change, financial restructuring, or gifting part of the property to a family member.

Our experienced Residential Property team can help with the legal process of changing the ownership status of a property. Our specialist Private Client team can also advise on issues such as Inheritance Tax planning in relation to properties and other assets to ensure any changes are tax efficient, especially in the wake of recent changes to the tax regime.

Why transfer equity?

• Adding a spouse or partner: When one person in a relationship is added to the property title.
• Divorce or separation: Removing a former partner from the title, often involving mortgage adjustments if the remaining party takes on the mortgage.
• Gifting property: Transferring part or full ownership to another person, often for estate planning.
• Inheritance or tax planning: Restructuring ownership shares to manage Inheritance Tax or other estate considerations.

Below sets out what we would do in a transfer of equity and how we can help ensure the process goes as smoothly as possible.

Initial instructions and advice

• We will first discuss your objectives and the reason for the transfer (e.g., adding a spouse to the title, removing a former partner, or transferring part ownership).
• We will clearly explain the process, costs, potential Stamp Duty Land Tax (SDLT) implications, and any legal responsibilities involved in the transfer, ensuring you understand the steps. However, we will not advise on any tax issues.

If you wish to discuss a case with us, please contact Tracey Longdon on 01420 81285 or fill in the form below.

Mortgage and lender consent

• If there is an existing mortgage on the property, you will need to contact the lender to obtain their consent for the transfer. Lenders typically need to approve any changes to ownership because it affects the loan security.
• If the person being added or removed from the title will impact the mortgage’s affordability or terms, the lender may require a reapplication or adjustment of the mortgage.
• If the property is mortgage-free, this is not applicable.

ID verification and anti-money laundering checks

• We will conduct identity checks and anti-money laundering checks on all parties involved, a standard requirement in property transactions.
• We will also request proof of source of funds if additional funds are being contributed by a new party.

Preparing the transfer deed

• We will prepare a transfer deed (TR1) to update the property’s ownership details at HM Land Registry.
• This deed formalises the change in ownership and specifies the shares in which the property is held if it will be owned jointly (e.g., tenants in common with specific shares or joint tenants with equal ownership).

Handling Stamp Duty Land Tax (SDLT)

• If the transfer involves payment or debt assumption (like taking on a mortgage), we will assess if SDLT is applicable. If so, we will calculate the amount owed based on the value being transferred and submit the SDLT return to HMRC on your behalf.
• In some cases, transfers between spouses or civil partners may be exempt, but this depends on circumstances and amounts involved – we can advise on this.

Drafting a Declaration of Trust (if applicable)

• If the property is being held in unequal shares (e.g., 70% and 30%), we may draft a Declaration of Trust (if asked to do so). This document clarifies the specific ownership interests and arrangements for how proceeds from a future sale would be divided. This is particularly common when adding a partner or family member and can protect each party’s financial contributions.

Arranging for signatures and execution

• Once the transfer deed is prepared, we will arrange for all parties to sign it.
• We will also oversee any other required documentation, ensuring that all signatures are properly obtained, and the documents are complete.

Managing mortgage adjustments (if applicable)

• If the transfer impacts an existing mortgage, we will coordinate with the lender to update the mortgage terms or register a new mortgage. This may involve arranging for a remortgage if the lender requires a new loan agreement with both parties.

Final statements and completion

• We will provide a final completion statement detailing all costs, including legal fees, Land Registry fees, and any applicable Stamp Duty.
• We will confirm the completion of the transfer with all parties.

Registering the transfer with HM Land Registry

• After the transfer deed is completed, we will submit it to HM Land Registry. This step officially updates the property’s title to reflect the new ownership arrangement.
• The Land Registry will then issue an updated title deed that lists the new owners and any updated mortgage information.

Contact us

If you have any questions about the transfer of equity process and how we can assist, please contact our Conveyancing Team at [email protected] or 01420 82879. Our Private Client team can also assist with any questions in relation to Inheritance Tax planning.