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Transfer of Equity Process

Emma Lunn

Written by

26th Jul 2021 (Last updated on 9th Aug 2021) 7 minute read

Transfer of equity is a change in the co-ownership status of a property by adding or removing a person from the deeds of the property. This alters the ownership of the property from a legal perspective.

You might arrange a transfer of equity to buy out an ex-partner, add your spouse to your property’s deeds, change the percentage shares owned by the co-owners of a jointly owned property, or transfer property ownership from joint to single. Transferring names on house deeds is commonly done on marriage or divorce.

Transfer of property ownership is different from the sale of property as at least one of the original owners of the property will stay the same.

What is Equity?

You have equity in your property if your home is worth more than the outstanding mortgage (or other debts secured on the property).

For example, if your home is worth £200,000 and you owe £50,000 on your mortgage, you have £150,000 equity.

Conversely, negative equity is when you owe more on your mortgage than your home is worth. So, if your mortgage is £175,000 but your home is worth £150,000, you are £25,000 in negative equity.

Why Would I Need to Transfer Equity?

The main reasons you might need to transfer equity are:

  • Adding a new partner or spouse to the title if you want them to have a financial interest in your home
  • When splitting from a partner or divorcing and you want to separate your finances
  • Transfer of ownership from joint to single (for example, if you bought a property with a friend)
  • Gifting ownership or part ownership to a family member or child for inheritance or tax purposes

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How Do I Transfer Equity?

You'll need to hire a conveyancing solicitor to transfer equity to take care of the legal side. Below are the steps in the transferring equity process.

1. Appoint a Solicitor

If someone will be joining your title – for example, adding a new partner – both parties can be represented by the same solicitor. But if someone is leaving the title deeds – such as an ex-partner – each party will need separate legal representation. All parties will need to provide identification to their solicitor.

2. Review the title deeds

Your solicitor will obtain an official copy of the property title or deeds from the Land Registry. They will check any outstanding mortgage or any other charges on the property.

3. Is there a mortgage?

If there is a mortgage on the property, you’ll need the consent of the mortgage lender to go ahead with the transfer. Adding someone to the title will make them equally liable for the mortgage so the lender will want to carry out an affordability assessment.

The same applies if you are removing someone from the property deeds and becoming the sole owner – the mortgage lender will want to be sure you can afford the mortgage on your own. It may want to change the terms of the mortgage at this point.

If your mortgage lender doesn’t agree to the transfer, you’ll need to repay the mortgage before pursuing the transfer. This can be done with cash (if you have sufficient funds) or by remortgaging to another lender in the names of the new owner or owners of the property.

Things are more straightforward if there isn’t a mortgage on the property.

4. Is the property leasehold?

If the property is leasehold, your solicitor will also need to obtain a copy of the lease. Your solicitor will also need to obtain consent from the freeholder for the change of ownership – there may be a fee for this.

5. Complete the TR1 form

A TR1 form from the Land Registry is the transfer of equity form used to transfer the legal ownership of a property from one party or parties to another party or parties. Your solicitor will fill in the form, outlining the transferor(s) (current owners), and the transferee(s) (new owners).

Each party will need to sign the TR1 form in the presence of a witness, and your solicitor will file it with the Land Registry.

6. Completion

When the transaction is complete, your solicitor will arrange the transfer of any funds between parties. Outgoing parties will need to complete and sign a Land Registry ID1 form to confirm their identity, in the presence of their solicitor.

Your solicitor will file the relevant documentation with the Land Registry. There is a fee for this, between £40 and £910, depending on the value of the property.

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      How Do I Transfer Ownership if There is a Mortgage on the Property?

      When you transfer equity, the new owners will be responsible for the mortgage payments. So, the mortgage lender will want to be sure the mortgage is affordable to the new owners and that they meet the lender’s criteria.

      This means the new owners will have to pass the mortgage lender’s eligibility and affordability checks in the same way you need to when you buy a home. Generally, this means new co-owners need to pass a credit check and be able to prove they can afford the mortgage payments. The lender will also check you have residency rights in the UK and are within the appropriate age range – most lenders have an upper age by which a mortgage must be paid off.

      If you are buying out an ex-partner or co-owner to own the property on your own, you’ll need a high enough sole income to pass the mortgage lender’s affordability checks. Many people buying out someone else remortgage for a higher amount than their existing mortgage and use the surplus cash to pay off the other person.

      If you don’t earn enough to take on the mortgage on your own you may need to pay off some of the loan with cash savings, if possible, or remortgage to a different lender.

      Do I Need a Solicitor to Transfer Equity?

      Technically, you can carry out a transfer of equity without a solicitor. But without the necessary legal knowledge it can be a confusing process. It’s better to use a solicitor, especially if there is the potential for conflict when splitting up with a partner. A solicitor can also advise about stamp duty and ensure the property is correctly registered with the Land Registry.

      If you’re adding a new co-owner to your title – for example, because you’ve got married – you can use the same solicitor. But if someone is leaving the title – if you’re buying someone out, for instance – you will both need your own solicitor.

      How Long Does a Transfer of Equity Take?

      If there’s no mortgage on the property, the transfer of property ownership can be completed in a matter of days or a couple of weeks. You can speed up the process by arranging for both parties to sign the transfer papers at the same time.

      It normally takes longer to transfer equity if there’s a mortgage to sort out. For example, if you need to remortgage to buy out a partner the timescale will be dependent on the remortgage process and can be up to six to eight weeks.

      Acrimonious separations or divorces can also slow things down, especially if one party doesn’t consent to the transfer. You’ll need legal advice in this situation.

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      How Much Does a Transfer of Equity Cost?

      The following costs apply when transferring equity:

      ItemApproximate cost

      Solicitor fees

      £250 - £500

      Identity checks

      £10

      CHAPS fees for money transfers

      £20 - £40

      Land Registry fees

      £50 - £910

      Freeholder consent (if leasehold)

      Up to £250

      Stamp duty

      Varies dependent on equity amount and property value

      Transfer of Equity and Stamp Duty

      Whether you need to pay stamp duty on a transfer of equity depends upon the ‘consideration' and the nature of the transfer of equity. Consideration includes both the equity being transferred and the value of the mortgage.

      If you’re adding a new partner or spouse to the property deeds and the transaction is more than £40,000, stamp duty is payable.

      But if the transfer is a gift (i.e. from the a parent to a child), or the property is split equally between two people, stamp duty isn’t payable. If a couple is divorcing or dividing property in accordance with a court order, there won’t be any stamp duty to pay.

      Learn More About Conveyancing

      This has been part of our conveyancing guide. In the next guide, we look at extending a lease on a property. To learn more, read how to extend a lease.

      Emma Lunn

      Written by Emma Lunn

      Freelance Personal Finance Journalist,

      Emma Lunn is an award-winning journalist who specialises in personal finance, consumer issues and property.

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