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How to apply for transfer of equity
As the person whose name is on the deed, you have the title to the property. A transfer of equity is often a simpler process than standard property sales or purchases. But it still requires some legal work.
To begin the process, you must apply for a remortgage or new mortgage on the property if needed. This is because your mortgage provider will need to account for the shifting ownership of a property. This is because it affects the property’s equity. It would be a good idea to speak to your mortgage lender or to a financial adviser about your options when doing this.
After this, make sure to inform a conveyancer. Using their expertise, they’ll be able to represent all parties involved in the transfer. Separate legal representation will be necessary if someone is being removed from the deed. Everyone involved in the transfer of equity will need to provide identification.
Your conveyancer will handle legal matters and communicate with your mortgage provider or property's freeholder if necessary.
Your conveyancer will provide the deed for signing and will support in the transfer of finances between parties. This will complete the transfer of equity. Anyone exiting the deed will have to sign and fill in an ID1 form with their conveyancer present.
Your conveyancer will then make sure that all the new ownership details are officially logged with the HM Land Registry. As well as this, they’ll work out any Stamp Duty Land Tax (SDLT) liable to HMRC and will manage the payment of it.
Transfer of equity
If you are changing the names on the title deed of a property, then you will need an official transfer of equity. This is whether you're adding or removing a name. A transfer of equity can include something as simple as putting your child on the deed. It can also be as complex as taking off an ex-partner to ensure the property is solely yours.
A transfer of equity doesn't have to be complicated. But if you're putting your child's name on the deeds, be aware of future potential inheritance tax implications.
Equity release
Equity release is different to a transfer of equity, although both deal with the value you have built up in your home. In an equity transfer, you simply add or remove a name on the property deed. The equity is then conferred to or from that person.
Equity release is a way of accessing the money in your property without moving out. It's done by selling part or all of it to an equity release firm. You then have either a lump sum or a monthly payment from the amount you have sold, without needing to move home.
Frequently asked questions
What is transfer of equity?
A transfer of equity is the process of transferring property ownership from one person to another. This could be all or only part of the property equity.
A transfer of equity can be done for several reasons. It can include when a couple separates or divorces and one partner wants to take over their ex-partner’s share of the property. Or perhaps someone wishes to pass their home on to their children. Learn more about the transfer of equity process.
Do I need a solicitor for a transfer of equity?
You will need a conveyancing solicitor to complete a transfer of equity. This is because they’re able to support you with the legal requirements and processes involved. It's possible to complete some parts of the transfer without legal support, but we do not recommend it.
A transfer of equity is a specialised part of property law. This means a conveyancing solicitor will be invaluable in helping to complete it smoothly for you. After all, your property is likely to be one of the most valuable things you own. If you are transferring equity within your property, you want to make sure it's going to the right person.
Transfer of equity Stamp Duty
Whether you have to pay tax when transferring equity depends on the situation that has led to the transfer. For instance, couples dissolving a marriage, legally separating or transferring equity by court order are not required to pay Stamp Duty Land Tax (SDLT) or Capitals Gains tax (CGT). If the property is split equally between people or is being transferred as a ‘gift’ and there is no mortgage, no SDLT and CGT will need to be paid.
However, if the property is being split unequally, the person receiving the property already owns a share in it, or if the total chargeable consideration exceeds the threshold, SDLT will need to be paid. If the equity transfer is to someone that is not your spouse or civil partner (perhaps a child or sibling) and is not a ‘gift’, CGT may be due. The amount that will need to be paid depends on how much the property has grown in worth.
It’s also good to keep in mind that Inheritance Tax (IHT) may need to be paid should you pass away within 7 years of the transfer of equity.
How long can a transfer of equity take?
The length of time it takes to transfer equity depends on the situation. On average, it should only take up 4-6 weeks. Usually, the main length of time taken is by the mortgage lender assessing eligibility. However, if you’re transferring equity without a lender, it can be very quick.
To speed up the process, you can sign the Transfer of Equity forms at the same time as the person who the property is being transferred to. It will only take a few days to be sent through to the Land Registry for confirmation.
The more complicated the situation leading to the equity transfer, the longer it will take. As an example, if you’re separating from an ex-partner who doesn’t consent to the transfer, or there are issues with the mortgage, the process can take longer to finalise. If everyone involved is on the same page, the transfer can be completed smoothly and promptly.
Transfer of equity costs
Cost can vary depending on the situation. Usually, a transfer of equity can cost anywhere between £100-£500 plus VAT. Factors that affect the cost of a transfer include the property’s value, if you’ll need to remortgage, and solicitor fees.
In terms of Stamp Duty Land Tax (SDLT) costs (if you need to pay it) how much you need to pay depends on the worth of the property.
