Transfers of Equity

What is a transfer of equity?

A transfer of equity is the process in which someone is either added to, or removed from, ownership of a property. Equity is the legal term for the percentage of the property you own.

There might be various reasons for wanting to transfer your equity for example, solely owning a property, getting married and wishing to add your spouse to the deeds. Alternatively, you might be transferring a property due to a divorce. Another common transfer of property is from parents to children.

A transfer might be a complete gift, or consideration may be involved.  ‘Consideration’ is money or anything that has money’s worth.  In most cases, property is transferred for an agreed sum of money, based upon its current value. Consideration also includes the relevant proportion of any mortgage that the transferring party is being released from. For example, if a property worth £500,000.00 with a mortgage of £200,000.00 is being transferred from a sole owner to that owner and someone else and each are to hold 50% of the property, the consideration will be £350,000.00. This is half the property value and half the existing mortgage debt.

What is the process of a transfer of equity?

The transfer of equity process is relatively straightforward and involves the following steps.

1. Instruct a reliable conveyancer – Get in touch today for more information about transfers of equity and how we can help you by contacting us on 02392 660261 or via our website www.biscoes-law.co.uk
2. ID Checks and compliance – This can be completed at one of our offices or remotely using secure links to our ID Checking software.
3. Review the title deeds – We will check the title deeds for any restrictions preventing the transfer from taking place or other entries that may need attention.
4. Prepare the Transfer Deed document – This is usually done by the solicitor acting for the person receiving the property (where both parties are separately represented).
5. Notify any mortgage lender – This is where we will ask for the mortgage lender’s consent for any mortgage which is to remain on the title after completion.  Mortgage lenders can have certain requirements that must be met before the transfer can take place.
6. Signing the Transfer Deed. Once the Transfer Deed is agreed, you will need to sign it in the presence of a witness.
7. Agreeing a completion date – This is the date the transfer formally completes and money changes hands (if any).
8. Register the Transfer Deed at the Land Registry – The Land Registry will register the new ownership and provide a copy of the updated title.

Other aspects to consider

Stamp Duty –Stamp Duty is calculated based on the ‘Consideration’ as discussed above.  If the total consideration is above the Stamp Duty threshold (currently £250,000.00) Stamp Duty will be payable. If the amount is over £40,000.00 (but less than £250,000.00) no Stamp Duty is payable but we will need to tell HMRC about the transaction.  HMRC’S rules for Stamp Duty payable in connection with ‘Additional property’ must also be considered.

You don’t pay Stamp Duty if you transfer the property under a separation agreement or court order because of divorce or the dissolution of a civil partnership.

Tax implications – We recommend that you seek advice from an Accountant or financial adviser about any other tax implications of the transfer and in certain circumstances we also suggest (or insist) that our Wills and Probate Team advise you further, particularly where the Transfer is to take place by way of gift.

Lender consent – In relation to transferring a property with a mortgage, you will require lender consent before proceeding. This applies to both adding someone to the deeds or removing them. Before providing consent, the lender will need to be satisfied that the remaining owner is able to afford the mortgage on their own and if someone is being added to the deeds, the lender will need to check affordability, credit history and identity of the person you wish to add.

How long does a transfer of equity take?

We estimate that the process will take between 4 and 6 weeks. Sometimes we can complete more quickly but where third parties are involved we will be dependent on their prompt dealing with matters to complete more quickly.  Instructing a reliable Conveyancer can be invaluable as we will chase the necessary parties to help speed up the process and keep you updated.

Get in touch today for more information about transfers of equity and how we can help you by contacting us on 02392 660261 or via our website www.biscoes-law.co.uk.