Managing a home

What is a transfer of equity?

6 min read

Transfer of equity involves changing the ownership of a property, either by adding or removing someone from the title deeds or by changing the shares among existing owners. Read on to find out more about what it is and how transferring equity works.

  • Amy Colton, Conveyancing Manager and qualified solicitor
    Amy Colton

    Conveyancing Manager

    Published June 19th 2024

middle aged man sorting out the transfer of equity after recently getting married

What is a transfer of equity?

A transfer of equity changes the ownership of a property. You have to complete a transfer of equity when a property’s owner adds or removes a person (or people) to or from the title of their home, altering the ‘ownership’ of the property from a legal perspective.

Our video details all the essential information relating to transfers of equity.

Watch our video to find out you can transfer equity

Duration: 1 minute 45 seconds

What is equity?

In relation to property, equity is a legal term that explains how much of a property you own. You can think of it as the value of the home minus any outstanding mortgage. So, if your property is worth £300,000, and you have £150,000 left to pay off on your mortgage, your equity would be £150,000.

Why would you need to transfer equity?

When you transfer equity, you can either ‘buy someone out’, or ‘gift’ someone. When you buy someone out, the remaining person(s) pays an agreed amount to the leaving person(s) for their share of equity, whereas for a gift, no money will be exchanged for a share of ownership.

There are a few reasons why you might need to transfer equity in your property, reasons such as:

  • If a couple separate you will need to divide up assets including those tied up in a house

  • In a new relationship you may want to add your partner’s name to the title of your house

  • If you bought a house with a friend of investment partner and want to buy the other’s share

  • If you want to add family members, such as adult children to the title.

Get a personalised quote

Get a quote for your transfer of equity today. Simply complete the quote form, and one of our Move Specialists will get in touch with you

What are the steps to transfer equity?

1. Apply for a remortgage

First, you’ll have to apply for a remortgage, or new mortgage. Because the property’s ownership is changing, affecting its equity, your mortgage provider will need to account for this. If you’re adding someone to the property’s title, then the mortgage lender will need to carry out checks as the new person(s) will become equally liable for the mortgage and repayments.

Speak to your mortgage lender or financial adviser about your options.

2. Instruct a conveyancer

Because at least one party will remain in ownership, a transfer of title deeds is usually a much simpler process than a standard property sale or purchase. Nonetheless, you’ll still need to instruct a conveyancer to guide you through the process and help take you through the legal process. Get a personalised conveyancing quote for your transfer of equity.

You’ll need to provide official copies of the property’s title to your conveyancer, along with all contractual documents regarding any mortgages. Your conveyancer will then:

  • Verify ID

  • Check source of funds

  • Complete all legal work, including checking the TR1 form has been filled in correctly

  • Communicate updates to your mortgage provider

  • Communicate updates to the property’s freeholder

If someone will be joining your title, both parties can be represented together. However, if someone is to leave, the parties will need to have separate legal representation.

3. Completion

Finally, your conveyancer will send the mortgage deed for you to sign and then facilitate the transfer of any funds between parties. Outgoing parties will need to complete and sign an ID1 form, in the presence of their conveyancer.

Once completed, your conveyancer will calculate any stamp duty liable to HMRC and facilitate payment of it. They’ll also ensure details of the new ownership are logged with the land registry.

What happens if you don’t have a mortgage on the property?

If there isn’t a mortgage, things are more straightforward. All parties just need to sign the transfer deed (TR1 form) and file it with the land registry. This needs to be accompanied by the land registry’s AP1 form, and if the value of the transaction amounts to more than £40,000, then a stamp duty land tax certificate may also be required.

How much does it cost to transfer equity?

The cost to transfer equity is calculated on many factors, such as your property’s value, whether it is a leasehold or freehold and if you need to remortgage. Costs you may have to pay when transferring equity include:

  • Conveyancing fees – this is for your conveyancer to complete the required legal work. In most cases, conveyancing will cost somewhere between £100 and £500 +VAT.

  • Search indemnity insurance – this insurance means that you can transfer equity without having to get conveyancing searches and that you are covered if anything crops up as a result of not getting them in the future. The cost for this could be anywhere between £20 and £300.

  • Mortgage fees – when you add or remove someone from the mortgage, you will have to let your mortgage provider know, so they can provide their approval, they may administration fees for this.

  • Leaseholder fees – if the property is a leasehold, you’ll have to let your freeholder know that you plan to add or remove someone from the title deeds. This can cost between £200 and £300.

  • Remortgaging fees – if you need to remortgage when adding or removing someone from the mortgage you will have the standard remortgaging costs to pay.

  • Land registry fees – the land registry has a cost to update the information on the title deeds. The cost for this could be anywhere between £20 and £305 depending on your property’s value and whether or not you can update them electronically.

  • Stamp Duty Land Tax (SDLT) - SDLT is payable if a person takes on equity or a mortgage which is worth over £125,000. You can find more information on when or when not stamp duty is payable on the website.

Do you have to pay stamp duty (SDLT) when you transfer equity?

Where a person(s) is taking on equity or a mortgage worth more than £250,000 in total and the chargeable consideration is more than £125,000, then stamp duty may need to be paid on it. The precise amount to pay is calculated using bands.

If a party is leaving the property’s title due to divorce, then no SDLT will be owed.

Transfer of equity FAQs

Why do I need a conveyancer when transferring equity?

Due to the amount of legal work involved, it’s recommended you appoint a conveyancer to complete this work on your behalf and help push your transfer through.

Why do I need to remortgage when transferring equity?

If you’re making changes to the title of deeds with the Land Registry, you will need to remortgage, as your mortgage lender will need to consent to the changes and update the mortgage with the new details.

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