A transfer of equity occurs when the legal ownership of a property changes, but at least one of the original owners remains on the title. This is common in situations such as marriage, divorce, gifting property to a family member, or updating ownership shares. In the UK, the process involves legal documentation, potential tax considerations, and official registration with the property registry. This 2025 guide outlines the process, costs, and key considerations to keep in mind before proceeding.
What is a Transfer of Equity?
- A legal change in property ownership where at least one original owner remains.
- Used to add or remove names from the property title deeds.
- Common in cases of relationship changes, estate planning, or tax structuring.
When Might You Need a Transfer of Equity?
Adding Someone to the Deeds
- Marriage or civil partnership
- Adding a partner to share mortgage responsibility
- Joint investment purposes
Removing Someone from the Deeds
- Divorce or separation settlements
- Buying out a co-owner’s share
- Estate restructuring after inheritance
Transferring Ownership Shares
- Adjusting percentages of ownership for tax efficiency
- Passing part of a property to children or family members
Legal and Tax Considerations
Stamp Duty Land Tax (SDLT)
- SDLT may apply if money or mortgage debt changes hands during the transfer.
- No SDLT is due if there’s no consideration and no mortgage involved.
Capital Gains Tax (CGT)
- Applies if the property is not your main home.
- Calculated based on the market value of the share transferred.
Inheritance Tax (IHT)
- Relevant if the transfer is part of gifting arrangements, depending on timing and residency rules.
Step-by-Step Process for a Transfer of Equity
1. Check Your Mortgage Terms
- If there’s a mortgage, you’ll need lender consent to change the ownership structure.
2. Obtain a Property Valuation
- Determines the value of the share being transferred for tax purposes.
3. Seek Legal Advice
- A solicitor will prepare the legal documents and ensure compliance with property law.
4. Sign the Transfer Agreement
- Both parties must agree to the ownership change and sign in the presence of witnesses.
5. Register the Change with the Property Registry
The updated ownership details must be officially recorded.
Costs Involved
- Legal fees: Typically £250–£600 depending on complexity
- Land registry fees: Based on property value
- Potential tax liabilities: SDLT or CGT, depending on circumstances
Risks and Important Considerations
- Once a name is removed, that person has no legal rights to the property.
- Adding someone to the deeds means they become a legal co-owner, with equal decision-making rights.
- A transfer of equity can impact future borrowing capacity and creditworthiness.
FAQs
Q: How long does a transfer of equity take in the UK?
A: On average, 4–6 weeks, depending on mortgage approval and legal processing times.
Q: Can I transfer equity for £0?
A: Yes, if it’s a gift and no mortgage debt is transferred, but tax rules still need to be checked.
Q: Is a solicitor required for a transfer of equity?
A: Yes, as the process involves legally binding changes to property ownership.
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