If you want to change who owns a property, even if the property itself isn’t being sold, you will likely come across the term ‘transfer of equity’.
A transfer of equity is the legal process used to add someone to a property title, remove someone from it, or change the share each owner holds. It is not the same as selling a property, because the ownership is adjusted, and at least one of the existing owners stays the same.
Transfers of equity are quite common and, in many cases, can be a straightforward process. However, things can become more complex if there is a mortgage on the home or if there are tax considerations. These property matters can also be more complex if the transfer of equity is due to a separation or divorce.
Regardless of the reason for changing the ownership status of your property, seeking the appropriate legal advice is vital to ensure that you are financially protected.
In this blog, our property team explains what transfer of equity means, when you might need it, and what you should be aware of when changing the ownership of your home.
What does transfer of equity mean?
In its most basic terms, a transfer of equity is the legal process of changing the name on the title deeds of a property, thereby changing the ownership status of the property. That could mean:
- Adding a new owner to the title deeds.
- Removing an existing owner from the title deeds.
- Changing how much of the property each owner legally holds.
Once the paperwork has been completed, the change must be registered with HM Land Registry, so the ownership record is updated correctly.
When is a transfer of equity used?
There are various reasons for changing the ownership status of your home, but some of the most common of these include:
- Separation or divorce
If you are keeping a property, you jointly owned with your partner or spouse, and are separating or getting divorced, your former partner will usually need to be removed from the title. Typically, this would form part of the wider financial arrangements. Our family law team can provide specific advice on financial settlements and divorce.
- Adding a spouse or partner
Another common reason for changing the ownership status is adding someone to the deeds after marriage, civil partnership, or moving in together. Sometimes, changing ownership status can also be used during a property remortgage.
- Buying out a co-owner
If you own a property with someone else, a friend or family member, for example, and you want to become the sole owner, their share can be transferred to you.
- Estate planning
A transfer of equity can be used if you want to transfer a share of a property to children or other family members as part of estate planning. If this is something you are considering, it is important to take legal advice as it could have tax and inheritance implications. Our estate planning team can provide specialist advice and guidance on organising your estate.
Will I need to pay Stamp Duty and Tax?
Possibly, and it is vital to check how a transfer of equity could impact your tax obligations. For example:
- Stamp Duty Land Tax (SDLT) may be payable on a transfer of equity if:
- money changes hands, or
- the person being added takes on responsibility for part of the mortgage
Some people assume that if there is no cash involved, then there are no SDLT obligations. However, HMRC can treat taking on a share of the mortgage as “chargeable consideration”, which can still trigger SDLT.
To get a general idea of whether SDLT could apply, you can check current rates and use the SDLT calculator on GOV.UK:
- Capital Gains Tax (CGT)
Capital Gains Tax (CGT) may also apply depending on who you are transferring the equity to and whether the property is your main home. For example,
- Direct transfers between spouses and civil partners are often treated differently.
- Transferring property ownership to other family members may trigger CGT in some circumstances.
CGT can be complex, and there are various implications to consider, so it is sensible to take advice before making any changes to property ownership.
Can you transfer equity to someone who is under 18?
Not directly, as a person under 18 cannot legally own property in their own name. If you want to transfer equity of a property to a child, this is usually done through a trust, where the property share is held on their behalf until they turn 18. Our trusts team can provide specialist advice on setting up and managing a trust and can also support trustees with their responsibilities.
Can both parties use the same solicitor?
Sometimes, yes. If the transfer is straightforward and there is no money changing hands, or there is no risk of disagreement, one solicitor may be able to act for both parties.
However, where there is a mortgage, payment, or risk of a dispute (for example, in separation cases), it is often better for each party to have independent legal advice, so everyone is protected.
Do you need to use a solicitor for a transfer of equity?
While it may be possible to complete some parts of the process yourself, it is not recommended. A transfer of equity can involve:
- mortgage lender requirements
- SDLT and CGT implications
- complex Land Registry applications
- wider family or financial settlement issues
Having a solicitor involved ensures everything is handled correctly, the correct documents are prepared, and the transfer is properly registered.
How does the transfer of equity process work?
When using a solicitor, the transfer of equity process usually involves the following steps:
- Title checks
Your solicitor obtains the title deeds from HM Land Registry and checks for restrictions, mortgages, and ownership details. - Identity checks
Each party’s identity must be verified. - Preparing the transfer deed
A transfer document (usually a TR1) is drafted for signature. - Lender consent (if there is a mortgage)
If a mortgage is in place, the lender must agree to the change of ownership. - Land Registry application
The signed documents and relevant fee are sent to HM Land Registry to update the title.
Useful Resources:
Below, you can find links to some of our other articles and resources for related information and guidance:
- Do You Need a Solicitor to Handle Conveyancing?
- Selling a Probate Property: What You Need to Know and How Bowsers Can Help
How Bowsers Solicitors Can Help
Even in straightforward situations, a transfer of equity often has long-term financial and legal implications which must be considered. Our conveyancing team regularly assists clients in March, Wisbech, and surrounding areas with transfer of ownership matters, and we can guide you through the process from start to finish.
To speak to one of our friendly yet professional property solicitors or chartered legal executives today, please call 01945 583194 (Wisbech) or 01354 652606 (March), or email reception@bowsers.co.uk. Alternatively, you can fill in our contact form.
