While everyone wants to own property, it’s not always something you do alone. There are plenty of situations where you might want to co-own a place with someone. Alternatively, you may jointly own something and wish to fully own it, or perhaps remove yourself from the ownership entirely. Transfer of equity is the legal process for making these changes.
Transfer of equity quick tips
You can find detailed answers to the most commonly asked questions on transfer of equity below. Here are some quick tips though, to get you started on the process:
- Locate the title deeds of the property
- Ensure all parties are in agreement over the ownership transfer and notify your mortgage lender
- Complete an equity transfer form – you can do this yourself or ask your solicitor to prepare it for you
- Submit the form to UK Land Registry
- Pay any Stamp Duty Land Tax owed, if the value of the transferred portion of the property exceeds £250,000
Now that you know what’s involved in the process, take a look at our detailed guide to equity transfers in the FAQs below.
What is a transfer of equity?
Transfer of equity is when a person is either added to, or removed from, the title deeds of a property. Equity is the legal term for the percentage of the property you own.
Why would I need to do a transfer of equity?
You might need to carry out a transfer of equity if, for example, you have just got married and wish to co-own your house with your new spouse. Or perhaps you are a parent and wish to transfer your equity to your child. Alternatively, you might be selling your stake in a business venture to your partner.
There’s a wide range of situations that require the transfer of equity between interested parties.
What is required for transfer of equity?
To carry out a transfer of equity, you just need the title deeds to your property. All parties involved in the transfer (usually there will be just two) need to agree to the process. Then you need to engage a solicitor to carry out the process, which usually costs a standard, one-time fee.
What is involved in a transfer of equity?
In the UK, transfer of equity works by filling out a simple form stating who is being added to, or removed from, the deed. All interested parties sign it before a solicitor sends the paperwork to the UK Land Registry for approval.
What is the process of transfer of equity?
The process of transfer of equity is roughly a 5-step process:
- Step 1: Prepare the title deeds to the property. Give them to your solicitor.
- Step 2: Prepare transfer documents. Your solicitor will do this for you.
- Step 3: Notify any third parties involved in the transfer. Usually, this will just be your mortgage lender.
- Step 4: Sign the transfer documents prepared by your solicitor.
- Step 5: Your solicitor will notify the Land Registry that the transfer of equity has been completed.
How easy is transfer of equity?
Transfer of equity is a fairly easy process. The most complicated part is probably ensuring that all parties are happy with the arrangement. If you have the property’s title deeds to hand, then your solicitor can quickly and easily talk you through the process.
Do note, however, that the process of transferring equity is slightly more complicated if you have a mortgage on the property. In this case, the mortgage lender who issued the loan will need proof and assurances that the new ownership arrangement won’t affect repayment.
How long does a transfer of equity take?
From filing the appropriate forms with the Land Registry to completion, you should expect the transfer of equity to take between four and six weeks. However, this is the average time for a simple equity transfer without undue complications. More complex situations can take longer to resolve.
What circumstances might delay transfer of equity?
If there is a mortgage on the property, transfer of equity will take longer. This is because the mortgage provider will need to approve the transfer. They will also need to be satisfied that the new owner(s) can reliably make the necessary repayments. Any legal disputes concerning property ownership – such as divorce proceedings – can also hold up the transfer of equity.
Do both parties need a solicitor for transfer of equity?
In a transfer of equity, the person being added to the deed must be represented by a solicitor. However, the person who already holds the deed doesn’t have to.
It’s quite common for both parties to have separate legal representation. This means they can receive independent advice. Still, if the process is amicable and you want to save money, one solicitor representing the buyer/new co-owner is enough.
As in any legal situation, if you are unsure, seek expert guidance. The right advice can often be worth far more than the fees you pay to get it.
Can you do a transfer of equity without a solicitor?
While it is possible to complete some parts of a transfer of equity yourself, it is a specialised part of property law. This means that you will need a solicitor to help complete it.
Again, we strongly advise that you seek legal counsel when considering a property-based financial transaction. UK property law is complicated and getting the paperwork wrong can result in major delays and even fines.
What is a transfer deed?
In any transfer of equity, there will be a transfer deed which is the legal document that officially declares the new ownership of the property. All parties involved will have the chance to see it, check and sign it.
The UK Land Registry has various transfer deed forms to cover different circumstances and types of property. However, the TR1 form is the most common. Use the TR1 form for properties being wholly transferred from one person to another.
Do you pay tax on transfer of equity?
You may need to pay stamp duty as part of transferring equity. This will depend on the exact type of transfer and your marital status.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a UK tax that you usually need to pay when buying or transferring property. HMRC’s full stamp duty guidelines will tell you everything you need to know about how and when to pay SDLT.
When do you pay stamp duty on a transfer of equity?
Stamp duty payment on a transfer of equity depends on the value of the property involved. If you are taking on equity or a mortgage worth more than £250,000, then some stamp duty may have to be paid.
Usually, you would pay 5% on everything above this threshold. However, you only pay SDLT if you are taking on equity in exchange for a payment (also called a ‘consideration’). Transfer of equity as part of a gift, divorce settlement or equal property spilt is exempt from stamp duty.
Can you do a transfer of equity without remortgaging?
Usually, a transfer of equity means you will have to remortgage. This is because you’re dividing or changing ownership between parties. Therefore, the mortgage lender needs to know that you can cover the mortgage without undue risk.
How much does transfer of equity cost?
Transfer of equity usually costs anywhere between £100 and £500 plus VAT. The reason that this price range is so wide is that there are a lot of factors to consider.
The property’s value, whether you need to remortgage, solicitor fees charges for additional checks – all these things make a difference. Generally, the simpler your transfer of equity needs, the cheaper and quicker it will be to complete.
Got more questions about the legal side of buying, selling, renting or owning property? Check out our Guides section which includes more helpful posts like our offers and contracts FAQ and a first-time buyer’s guide to getting a mortgage.
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