Transfer of Equity Conveyancing
Legal Help When Adding or Removing Someone From a Property
A transfer of equity changes the legal ownership of a property without necessarily involving a normal sale on the open market.
It may involve adding a partner to the ownership, removing an existing owner, transferring a share following separation or gifting an interest in a property to a family member.
At Trusted Conveyancers, we’ve done the hard work, so you don’t have to, helping you find carefully selected conveyancing firms with experience in transfer of equity transactions.
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What Is a Transfer of Equity?
A transfer of equity is a legal process used to change who owns a property.
Despite the name, it does not necessarily mean that money or “equity” is physically transferred between the people involved.
For example, a property may currently be owned by two people and transferred into the sole name of one of them. Alternatively, a sole owner may add another person as a joint owner.
The legal title must be changed to reflect the new ownership arrangements.
HM Land Registry requires an application to change the registered ownership when someone is added as a joint owner or becomes the new owner of a registered property.
When Might You Need a Transfer of Equity?
There are many reasons why property ownership might need to change.
Common situations include:
- Adding a spouse or partner to the property
- Removing an owner following separation
- Transferring ownership following divorce
- Gifting a share of a property to a family member
- Transferring property between family members
- Changing from joint ownership to sole ownership
- Adding an adult child to the ownership
- Changing ownership as part of financial or estate planning
- Changing ownership at the same time as remortgaging
Although there may be no conventional buyer and seller, changing the legal ownership of a property can have important mortgage, tax and Land Registry implications.
Transfer of equity is one of several transactions where additional legal work may be required. You can explore our Specialist Conveyancing section for guidance on other less straightforward property transactions.
How Does a Transfer of Equity Work?
The precise process depends on the circumstances, but a typical transfer of equity may involve:
1. Checking the Property Title
The conveyancer obtains the title information and checks:
- The current registered owners
- Existing mortgages
- Restrictions
- Notices
- Other matters affecting the title
2. Establishing the Proposed Ownership
The conveyancer needs to understand:
- Who is currently registered as owner
- Who will remain an owner
- Who is being added or removed
- Whether any money is changing hands
- Whether there is a mortgage
- How the new owners intend to hold the property
3. Dealing With the Mortgage Lender
Where the property is mortgaged, the lender’s requirements will normally need to be dealt with before the ownership can be changed.
4. Preparing the Transfer Documentation
The appropriate legal documentation is prepared to transfer the property into the new ownership.
5. Considering Tax Requirements
The conveyancer will establish whether the transaction needs to be reported for Stamp Duty Land Tax in England or whether Land Transaction Tax requirements apply in Wales.
6. Completing the Transfer
Once the legal and lender requirements have been satisfied, the transfer can complete.
7. Updating HM Land Registry
The change of ownership is then registered at HM Land Registry.
Adding Someone to the Ownership of a Property
A common transfer of equity involves a sole owner adding another person to the legal title.
For example, someone may have bought a property alone and later decide to add their spouse or partner.
The existing owner does not necessarily need to sell the property to the new joint owner in the conventional sense.
However, the legal ownership still needs to be changed correctly.
The conveyancer will consider:
- The existing title
- Whether there is a mortgage
- Whether the lender agrees to the change
- Whether money is being paid
- Whether mortgage liability is being taken on
- How the property will be owned following the transfer
- Whether any tax reporting or payment is required
Can You Add Your Partner to Your Property?
Potentially, yes.
If you own a property in your sole name, you may be able to transfer it into joint names with your spouse or partner.
However, where the property is mortgaged, you should not assume that the ownership can simply be changed without involving the lender.
The lender may need to approve the additional owner and may carry out its own financial and identity checks.
The tax position should also be considered, particularly where the person being added takes responsibility for part of an existing mortgage.
Removing Someone From the Ownership of a Property
A transfer of equity can also be used to remove an existing owner.
For example, two people may own a property jointly but agree that one will retain the property following separation.
The person remaining may:
- Take over the other owner’s share
- Pay them an agreed amount
- Take responsibility for a larger proportion of the mortgage
- Become the sole registered owner
Where there is a mortgage, the lender must normally be satisfied that the remaining owner can take responsibility for the borrowing.
Transfer of Equity Following Separation
Property ownership often needs to be addressed when an unmarried couple separates.
If one person intends to remain in the property, the legal title may need to be transferred from joint names into their sole name.
There may also be an existing mortgage and an agreed payment for the departing owner’s interest.
It is important that the transaction is formally completed rather than assuming that moving out of the property removes someone’s ownership or mortgage responsibilities.
Where the parties disagree about their respective interests in the property, they may need independent legal advice before the conveyancing can proceed.
Transfer of Equity Following Divorce or Civil Partnership Dissolution
Property may also be transferred as part of a divorce, legal separation or dissolution of a civil partnership.
The transfer could result from an agreement between the parties or a court order.
The conveyancer will need to understand the arrangements that have been agreed and any relevant order or documentation.
There are specific SDLT rules for property transferred in connection with divorce, dissolution or legal separation. HMRC states that qualifying transfers between partners made under an agreement or court order because of divorce, dissolution or legal separation are exempt from SDLT.
The circumstances should still be provided to the conveyancer so the transaction can be dealt with correctly.
Gifting a Share of a Property
It is possible to transfer all or part of a property to another person as a gift.
For example, a parent might decide to give an adult child an interest in a property.
However, describing a transaction as a gift does not necessarily mean there are no legal or tax considerations.
The conveyancer may need to consider:
- Whether the property is mortgaged
- Whether the recipient will assume mortgage liability
- Whether there are restrictions on the title
- The relationship between the parties
- Whether the property will continue to be occupied by the person making the gift
- Stamp Duty Land Tax or Land Transaction Tax implications
- Potential wider tax implications
Depending on the circumstances, separate tax or financial advice may be appropriate.
Can You Transfer Property to a Family Member?
Yes, property can potentially be transferred between family members.
Examples might include transfers:
- From parent to child
- Between siblings
- Between spouses or partners
- From one joint owner to another
Being related does not remove the need to deal properly with the legal transfer.
The mortgage, tax position, ownership arrangements and Land Registry requirements still need to be considered.
What Happens if There Is a Mortgage?
A mortgage is one of the most important considerations in a transfer of equity.
The ownership of a mortgaged property should not simply be changed without dealing with the lender’s requirements.
For example, if one of two joint owners is being removed, the lender may need to agree to release that person from the mortgage.
Likewise, where a new owner is being added, the lender may need to agree to that person becoming party to the mortgage.
The lender may consider:
- Income
- Affordability
- Credit history
- Existing borrowing
- The proposed ownership structure
The conveyancer will normally liaise with the lender as part of the transaction.
Does Removing Someone From the Title Remove Them From the Mortgage?
Not automatically.
The legal ownership of the property and the mortgage obligations need to be dealt with properly.
Removing someone’s name from the property title does not, by itself, mean that a lender has released them from their obligations under the mortgage.
Where a mortgaged property is being transferred into one person’s sole name, the lender will normally need to agree to release the departing borrower.
This is why the mortgage arrangements should be considered at the beginning of the transaction.
Transfer of Equity With a Remortgage
Sometimes a change in property ownership takes place at the same time as the mortgage is changed.
For example, following separation, one owner may take the property into their sole name while replacing the existing joint mortgage with a new mortgage in their own name.
Alternatively, someone may remortgage while adding a spouse or partner to the ownership.
This combines two legal processes:
The transfer of equity changes the ownership.
The remortgage replaces the existing mortgage with new borrowing.
Our separate Remortgaging With a Transfer of Equity guide explains this situation in more detail.
Do You Need a Conveyancer for a Transfer of Equity?
Although HM Land Registry provides forms that individuals can use themselves, changing legal ownership can involve significant legal and financial consequences. HM Land Registry itself notes that land registration can be complex and recommends considering the benefits of using a conveyancer.
A transfer of equity may involve:
- Mortgage lender requirements
- Tax considerations
- Ownership arrangements
- Land Registry restrictions
- Leasehold requirements
- Payments between owners
- Independent legal advice
- Registration requirements
Using a conveyancer helps ensure that the ownership change is correctly documented and registered.
What Documents Are Needed for a Transfer of Equity?
The exact requirements vary, but your conveyancer may ask for:
- Proof of identity
- Property title information
- Mortgage details
- Details of the current owners
- Details of the proposed new owners
- Information about any payment being made
- Details of the proposed ownership shares
- Relevant court orders or separation agreements
- Lease information where applicable
- Lender documentation
Additional documents may be required depending on the circumstances.
How Will the Property Be Owned After the Transfer?
Where two or more people will own the property after the transfer, they will need to consider how their beneficial ownership is held.
The two principal forms of joint ownership are:
Joint Tenants
The owners jointly own the property and, on the death of one owner, their interest will normally pass automatically to the surviving joint owner or owners.
Tenants in Common
Each owner has a distinct beneficial share in the property.
Those shares do not necessarily have to be equal.
An owner’s share can generally pass under their will or the intestacy rules rather than automatically passing to the other owner.
The conveyancer can explain the legal distinction and record the chosen ownership arrangement appropriately.
What if the Owners Want Unequal Shares?
Two people may contribute different amounts towards a property or agree that they should own different beneficial shares.
For example, they might agree to ownership of:
- 50/50
- 60/40
- 70/30
or another arrangement.
Depending on the circumstances, the parties may wish to consider a declaration of trust recording their respective beneficial interests and any agreed financial arrangements.
The conveyancer can explain whether additional documentation may be appropriate.
Is Stamp Duty Land Tax Payable on a Transfer of Equity?
Potentially.
A transfer of equity does not automatically result in Stamp Duty Land Tax, but SDLT can arise where the person acquiring an interest in the property gives chargeable consideration.
Importantly, chargeable consideration does not have to be a cash payment.
It can include taking responsibility for an existing mortgage debt. HMRC specifically confirms that the transfer of debt, including an outstanding mortgage, can form part of the consideration for SDLT purposes.
For example, where two people jointly own a mortgaged property and one becomes the sole owner, the consideration can potentially include:
- Money paid to the departing owner, and
- The mortgage liability associated with the share being transferred.
Whether SDLT is actually payable depends on the precise circumstances and the applicable rules and thresholds.
The conveyancer can establish whether an SDLT return is required and whether tax is payable.
Is SDLT Payable if No Money Changes Hands?
Not necessarily — but “no money changes hands” does not always mean there is no chargeable consideration.
If property is transferred as a genuine gift and there is no chargeable consideration, SDLT will not normally apply.
However, if the recipient takes responsibility for some or all of an existing mortgage, that mortgage liability can count as consideration.
This is why the mortgage position needs to be considered as well as any cash payment.
What About Land Transaction Tax in Wales?
Stamp Duty Land Tax applies to property in England and Northern Ireland.
Property transactions in Wales are instead subject to Land Transaction Tax (LTT).
Where a transfer of equity involves a property in Wales, the relevant LTT rules should therefore be considered rather than assuming the English SDLT rules apply.
Your conveyancer can establish the reporting and tax requirements applicable to the particular transaction.
Could There Be Other Tax Implications?
Potentially.
Changing ownership of a property can have tax consequences beyond SDLT or LTT depending on the circumstances.
For example, Capital Gains Tax may need to be considered in some transfers, particularly where a property is not the owner’s main residence or an interest is being transferred other than between spouses or civil partners in circumstances where specific tax rules apply.
Inheritance Tax and other tax considerations can also potentially arise when property is gifted.
These issues can depend heavily on individual circumstances.
A conveyancer can deal with the legal property transfer, but specialist tax or financial advice may be appropriate where the wider tax position is uncertain.
What if the Property Is Leasehold?
A leasehold property can involve additional requirements when ownership changes.
The conveyancer will examine the lease and title to establish whether anything needs to be done in connection with the transfer.
This might include:
- Notifying the freeholder
- Notifying the managing agent
- Obtaining consent where required
- Dealing with restrictions on the title
- Providing certificates required for registration
- Paying administration or notice fees
The precise requirements depend on the lease and the arrangements for the particular property.
What if There Is a Restriction on the Property Title?
The title may contain a restriction that prevents HM Land Registry from registering a transfer unless certain requirements are satisfied.
Restrictions can arise for many reasons.
For example, they may relate to:
- A mortgage lender
- Joint ownership
- A management company
- A trust
- Another party with an interest in the property
The conveyancer will check the title at the beginning of the transaction and establish what is required to comply with any restriction.
Does a Transfer of Equity Need to Be Registered With HM Land Registry?
Where a registered property’s legal ownership changes, the register needs to be updated to reflect the new ownership.
HM Land Registry provides form TR1 for transferring the whole of a registered title. A different form, TP1, is used where only part of the land within a registered title is being transferred.
For an ordinary transfer of equity involving the ownership of an entire house or flat, it is generally the ownership interest that changes rather than a physical piece of the land being carved out.
The conveyancer will prepare the appropriate documentation and submit the application to HM Land Registry following completion.
Will Both Parties Need Separate Solicitors?
It depends on the circumstances.
In some straightforward transfers, one conveyancer may be able to deal with the transaction subject to professional rules and the particular circumstances.
However, separate legal representation may be necessary or advisable where the parties’ interests differ.
This is particularly relevant where:
- A couple is separating
- One owner is giving up a valuable interest
- There is disagreement about ownership or money
- A lender requires independent legal advice
- There is a potential conflict of interest
- One party needs advice about the consequences of the transfer
The conveyancer can establish at the outset whether separate representation is required.
How Long Does a Transfer of Equity Take?
There is no single timescale.
A straightforward transfer with no mortgage may be relatively simple, while a mortgaged transfer can take longer because the lender needs to be involved.
The timescale can depend on:
- Whether there is a mortgage
- How quickly the lender responds
- Whether a remortgage is involved
- Whether both parties agree
- Tax requirements
- Leasehold requirements
- Restrictions on the title
- Whether separate legal representation is required
- How quickly documents are signed and returned
Your conveyancer should be able to give a better indication once the circumstances of the transaction are known.
What Can Delay a Transfer of Equity?
Possible Delay |
Why It Can Cause Problems |
|---|---|
|
Mortgage Lender Approval |
The lender may need to assess the proposed new borrowing arrangements |
|
Remortgage Requirements |
New mortgage documentation and lender conditions may need to be completed |
|
Disagreement Between Owners |
The legal transfer may not be able to proceed until the terms are agreed |
|
Separate Legal Representation |
Another conveyancer may need to be instructed |
|
Leasehold Requirements |
Freeholder or management company requirements may need to be satisfied |
|
Title Restrictions |
Additional consents or certificates may be required |
|
Tax Issues |
The SDLT or LTT position may need to be established |
|
Missing Documentation |
Further information may need to be obtained before completion |
Identifying these matters early can help prevent avoidable delays later.
How Much Does Transfer of Equity Conveyancing Cost?
The cost depends on the work involved.
A straightforward transfer involving an unencumbered registered freehold property will generally involve less work than a transaction involving:
- A mortgage
- A simultaneous remortgage
- Leasehold property
- Separate legal representation
- A declaration of trust
- Title restrictions
- Additional lender requirements
- Complex ownership arrangements
There may also be costs in addition to the conveyancer’s legal fee, such as HM Land Registry fees, lender-related charges, leasehold administration fees or tax where applicable.
Ask for a clear quote explaining what is included and what additional charges may arise.
How Can You Prepare for a Transfer of Equity?
Providing the relevant information at the outset can make the process easier.
Before instructing a conveyancer, it can help to establish:
- Who currently owns the property
- Who will own it after the transfer
- Whether anyone is being paid for their share
- Whether there is a mortgage
- The approximate outstanding mortgage balance
- Whether the lender has already been contacted
- Whether a remortgage is planned
- How the new owners intend to hold the property
- Whether there is a court order or formal separation agreement
- Whether the property is freehold or leasehold
Tell the conveyancer the full circumstances rather than assuming that something is irrelevant because no money is changing hands.
Transfer of Equity: Quick Answers
Why Choosing the Right Transfer of Equity Conveyancer Matters
A transfer of equity can look straightforward, but changing property ownership can involve more than simply changing the names at HM Land Registry.
The conveyancer may need to deal with mortgage lender requirements, tax considerations, ownership arrangements, title restrictions and registration before the transfer can be completed.
At Trusted Conveyancers, we’ve done the hard work, so you don’t have to. Rather than spending hours comparing firms yourself, we’ve carefully assessed the conveyancing firms we recommend based on communication, service standards, transparency and professionalism, so you can choose with confidence.
Transfer of Equity Experience
A conveyancer familiar with transfer of equity transactions will understand the additional legal and lender requirements involved in changing property ownership.
Mortgage Experience
Where a property is mortgaged, the lender’s requirements need to be coordinated with the legal transfer.
Clear
Communication
Changing property ownership can involve several parties. Clear communication helps everyone understand what is required and what happens next.
Carefully Selected Firms
Every conveyancer we recommend is assessed against our selection criteria before being included.
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