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How to apply for a transfer of equity
As the person whose name is on the deed, you have the title to the property. Transferring equity is often a simpler process than standard property sales or purchases, but still requires some legal work.
To begin the process, you must apply for a remortgage or new mortgage if needed. This is because your mortgage provider will need to account for the shifting ownership as this affects the property’s equity. It would be wise to speak to your mortgage lender or to a financial adviser about your options when doing this.
After this, inform a conveyancer. Using their expertise, they’ll be able to represent all parties involved in the transfer. If someone is being removed from the deed, separate legal representation will be necessary. Everyone involved in the transfer of equity will need to provide identification.
Your conveyancer will manage the legal processes, as well as confirm details with your mortgage provider or the property’s freeholder if needed.
To complete the transfer of equity, your conveyancer will provide the deed for signing and will support in the transfer of any finances between parties. 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 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.
Transferring equity
If you are changing the names on the title deed of a property, whether that be adding a name or removing one, then you will need an official transfer of equity. This can include something as simple as putting your child on the deed, or as complex as taking off an ex-partner to ensure the property is solely yours.
Equity transfer 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.
Releasing equity
Equity release is very 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, and the equity is conferred to or from that person. As the property isn't being sold, it's a future concern.
Equity release is a way of accessing the money in your property without moving out, by selling part or all of it to an equity release firm.
Frequently asked questions
What is meant by 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. Transferring equity can be done for several reasons, including when a couple separates or divorces and one partner wants to take over their ex-partner’s share of the property, or if 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 in the equity transfer. It is possible to complete some parts of the transfer without legal aid, but we do not recommend it. An equity transfer is a specialised part of property law, meaning a Conveyancing Solicitor will be invaluable in helping to complete it smoothly for you.
Do you pay tax on an equity transfer?
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.
How much does a transfer of equity cost in the UK?
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.
