Transfer of equity

Equity is the difference between the value of a property and the amount owed on a mortgage. A transfer of equity involves a person being added to or removed from the title of a property without it being sold. This might be because

  • a sole owner wants to add their husband or wife
  • a couple are separating
  • an accountant has advised it for tax reasons (a transfer of equity to children or other family members can be more tax efficient)

Transfer of equity with no mortgage

If there is no mortgage and no money is changing hands, the process is fairly straightforward. Your solicitor should be able to complete the transfer quickly, though this will depend on how soon the required information and documentation is provided. However, the Land Registry only takes a few weeks to register the new ownership of the property.

Transfer of equity with a mortgage/money changing hands

If you’re adding or removing a person from the title of a property with a mortgage, permission will be needed from your mortgage company. This is because the names on the mortgage deed must match the names on the transfer deed. This can slow down the process.

If money is changing hands – for example a person is being removed from the title of the property and the remaining owner is buying their share – then the transfer of equity is a little more complicated and additional fees may have to be paid. They could include the following.

Stamp duty

Anything of monetary value given in exchange for the property is referred to as ‘consideration’. This includes a cash transfer or a mortgage. Stamp duty is only paid when the consideration is greater than the government set limit (this limit is lower than normal where a second property is apparent). The amount depends on the sums involved, such as how much the property is worth and the value of any mortgage.

Search indemnity insurance

The mortgage company may ask you to obtain search indemnity insurance. This is instead of numerous, costly searches being undertaken. It protects them from losses should anything have been revealed in the searches that adversely affects the value of the property. It usually costs around £20.

Land Registry fee

The Land Registry charges a fee for changing the details of the owners of the property. The amount depends upon the sums involved, but it’s usually between £20 and £455.

Transfer of equity for a leasehold property

If the property is leasehold, the freeholder or landlord will usually charge their own administration fees. Your solicitor will liaise with them to find out the cost.

Transfer of equity process

If the property has a mortgage, you or your solicitor will write to the mortgage company to request their consent to the transfer. The person acquiring the property may require further funds to complete the transfer, which would involve extra steps.

An up-to-date copy of the legal title will be obtained from the Land Registry, known as the ‘official copies’. If the property is unregistered, the title deeds will be obtained from you or your mortgage company or wherever they are stored. The title will then be checked for issues.

The necessary transfer deed will then be prepared by your solicitor and provided to the outgoing or incoming owner for signature.

It will then be signed by you and, if necessary, your mortgage company.

If money is being paid to the outgoing or incoming owner, this needs to be done when the transfer of equity is completed.

We can support you throughout the process. Contact us to obtain a free, no-obligation quote today. Get a quote