Property ownership can be complicated, especially when circumstances change. Whether you’re getting married, entering a civil partnership, separating, or want to add a family member to your property title, transferring equity might be the answer. This legal process allows you to change the legal ownership or transfer a share of your property without having to sell it outright.
Understanding when and how to use a transfer of equity and the tax implications, such as stamp duty land tax (SDLT) and capital gains tax, can save you time, money, and legal headaches. This guide explains everything you need to know about the equity transfer process, including common scenarios, existing mortgage considerations, land registry requirements, costs, and tax liabilities.
What Is a Transfer of Equity?
A transfer of equity is a formal legal proceeding that changes the ownership structure of a property. It can be updating the title deeds or transfer deed document to add or remove names from the property title, change the ownership percentage between joint owners, or transfer the property to a child or family member. The process also requires updating the records with the Land Registry to ensure the new legal owner or owners, and may include changes to the outstanding mortgage or mortgage deed.
Unlike a standard property sale, a transfer of equity usually happens between people who are already connected to the property, such as family members, civil partners, or joint owners.
Common Situations That Require a Transfer of Equity
Marriage and Civil Partnerships
Many couples add a new partner or civil partner to the property title after marriage or the formation of a civil partnership. This ensures both parties become legal owners and can help with inheritance tax planning or securing ownership rights.
Divorce, Separation, and Ending a Civil Partnership
During divorce, separation, or civil partnership dissolution, one partner may want to transfer their share to the other, changing the legal ownership. This allows one person to stay in the family home and the other to receive the monetary value of their equity share, potentially affecting tax efficiency or triggering stamp duty.
Adding a Child or Family Member
Parents sometimes transfer property or a share of it to a child or another family member, either as a potentially exempt transfer for inheritance tax purposes or for care and financial arrangements. Always seek professional advice on the possible tax charges and whether you may need to pay stamp duty or pay capital gains tax in these scenarios.
Releasing or Taking Equity
Some property owners may want to release the equity in their home, known as an equity take, by transferring a share of the ownership to another party. This may require a new mortgage or the written consent of your existing mortgage provider, and should be handled by equity solicitors to ensure compliance and tax efficiency.
Death of a Joint Owner
When a joint owner passes away, the surviving legal owner will need to transfer the deed records and update the property deeds with the Land Registry. If the property is in a trust deed or part of estate planning, inheritance tax and other processes (such as instructing separate solicitors or following Law Society guidelines) should be considered.
Business or Investment Partnerships
Business partners or investment groups with joint ownership may need to adjust their shares, manage chargeable consideration, or transfer the property between original legal owners or new parties.
The Transfer of Equity Process
Properties Without an Existing Mortgage
For properties with no outstanding mortgage, the equity transfer is generally more straightforward. All parties must agree to the terms, and a qualified solicitor or conveyancer will draft the necessary deed transfer and submit an application to the Land Registry. The fee for the land registry and any associated equity costs will need to be paid.
Properties With a Mortgage
When the property has an existing mortgage, you’ll need the written consent of your mortgage lender or provider before proceeding. The lender will assess whether the new ownership arrangement affects their security and may require a credit agreement or that the new party become liable for the mortgage payments.
If a new mortgage is being arranged as part of the transfer, both the transferor (the person giving up ownership) and the new joint owner (or sole owner) will go through affordability and credit checks before final approval. You may also need to instruct separate solicitors if both parties’ interests diverge.
Re-mortgaging or Change of Mortgage Provider
If you’re re-mortgaging, the new mortgage lender will consider the current market value, the credit agreement, any outstanding mortgage balance, and the process for changing ownership. The equity transfer may be completed simultaneously with the new mortgage.
Timeline and Duration
Most equity transfer cases are complete within 2-6 weeks, provided all necessary documentation, written consent, and agreements are in order. Delays may occur if:
- Separate legal representation is needed for both the transferor and the recipient
- New mortgage arrangements or lender approval (from the existing mortgage provider) are required
- Disputes over the monetary value or ownership percentages arise
- The property is in a trust deed or family court orders
- The transaction involves complex tax or chargeable consideration above the stamp duty threshold
- You’re transferring property temporarily or doing a potentially exempt transfer for inheritance tax purposes
Divorce and separation cases involving property transfer can take longer due to court schedules and the need for official consent documented in a legally binding agreement.
Costs and Fees
Most equity solicitors offer fixed fees for the transfer of equity process, but costs will depend on the complexity of the case, outstanding mortgage arrangements, and whether you need to pay stamp duty or tax on property or investment gains.
Extra Costs
- Stamp Duty Land Tax (SDLT): You may need to pay stamp duty if the transferred share exceeds the SDLT threshold or involves consideration, such as transferring home loan payments or a monetary sum. Transfers between spouses may be exempt, but always seek professional advice specific to your situation. Welsh property owners should consider the Welsh Land Transaction Tax.
- Capital Gains Tax: Those transferring ownership to someone other than a spouse or civil partner may need to pay tax on property or investment gains, especially if the property has increased in value.
- Land Registry Fees: Every equity transfer must be registered with the Land Registry, and a fee applies, scaled to the property’s value.
- Legal and Administrative Charges: Additional charges for preparing a deed of transfer, updating property deeds, and managing chargeable consideration may apply.
Contact a qualified solicitor experienced in property law and equity transfers for a quote. Firms like Grant Saw Solicitors can outline costs, key factors, and advise on the best approach.
Before You Begin
Tax, Mortgage, and Legal
Transferring equity can have significant tax implications, including tax on property gains and inheritance tax, as well as stamp duty. Always consider your tax liabilities and the impact on the transferor and any new joint owner.
Also, review any credit agreement, outstanding mortgage obligations, and whether a change in house loan payments or provider is required. A professional adviser can help you structure the arrangement for tax efficiency and a smooth transfer.
Deeds, Documents, and Legal Representation
Whether updating the mortgage deed, property deeds, or instructing separate solicitors, documentation is key. If you’re entering a new credit agreement, changing joint ownership, or transferring between original legal owners and a child or family member, ownership needs to be recorded in the land registry. The right process protects both parties’ interests.
Why Get Professional Advice?
A transfer of equity involves property law, tax, and contractual obligations. Professional legal advice helps:
- Explain all tax implications
- Negotiate with mortgage lenders and ensure all payments or new mortgage arrangements are structured correctly
- Complete all equity and stamp duty paperwork and the deed of transfer
- Register the change with the Land Registry
- Structure the transfer for tax efficiency and transparency of transfer costs
Solicitor advice is especially important if the transfer involves civil partnership dissolution, legal separation, credit agreements, or complex family arrangements.
What to Do Next with Equity Transfer
A transfer of equity is a flexible tool for changing ownership between family members, when entering or leaving joint ownership, or as part of inheritance planning. By understanding the process, required consent, equity costs, tax, and legal implications, you can ensure your transfer runs smoothly.
The key to a successful property transfer is to get professional advice early. A skilled solicitor or adviser can help you assess your needs, explain the risks and costs, instruct separate representation where necessary, and complete the equity process efficiently.
If you’re transferring equity or transferring property to a new partner, joint owner, or family member, contact equity solicitors who specialise in property, tax, and conveyancing to protect your property ownership and legal interests in line with the Law Society’s guidelines.
