Transfer of Equity Help to Buy: Add or Remove an Owner
When a Help to Buy homeowner needs to make changes to the ownership of their property such as adding a new owner (e.g., a partner, family member), removing an existing owner (e.g., due to divorce or death), or replacing an existing owner, they need to transfer equity. This process involves adjusting the ownership shares of the property and potentially the mortgage repayments.
Transferring equity in a Help to Buy home can be complex; it involves coordinating with various parties, including the lender, the Help to Buy agency (Homes England), and potentially the new owner or their legal representative.
Reasons for transferring equity in a Help to Buy home
Adding a new owner
To add a new co-owner to your Help to Buy property, they must meet the same eligibility criteria you did when you first applied. This includes being a first-time buyer and passing an eligibility check.
- Partnerships: When a couple moves in together or gets married, they may want to add the other partner's name to the property title.
- Family Members: Homeowners may want to add their child's name to the property to pass on wealth or provide them with a stake in the property. This can be a valuable asset for the child's future, especially if they plan to buy their own home.
Removing an owner
You can remove an existing homeowner from your Help to Buy property if the following condition is met:
- The remaining homeowners can prove that they have the financial means to repay both the mortgage and the equity loan.
- Divorce: In a divorce, one partner may want to remove the other's name from the property title. This can be part of the divorce settlement, and it can help to avoid future disputes over ownership.
- Death: If a homeowner dies, their estate will need to transfer ownership of the property to their beneficiaries or heirs. If the beneficiary does not meet the eligibility criteria, they might be required to sell the property. This process can be complex, and it's important to seek legal advice to ensure that the transfer is carried out correctly.
What is a Deed of Assent?
An Assent is a formal legal document that transfers ownership of property or land from the estate of a deceased person to the designated beneficiary. This process typically occurs when the deceased person has left specific instructions in their Will regarding the inheritance of their property.
The beneficiary could be a surviving spouse, partner, child, grandchild, or any other individual named in the Will. Once the Assent is executed and registered, the new owner legally acquires ownership of the property.
For jointly owned properties, ownership automatically transfers to the surviving owner(s). To update the title in the Land Registry records, you can use form DJP. If the property is unregistered, a death certificate should be added to the property deeds.
Whether you're responsible for managing a deceased person's estate or a beneficiary expecting to inherit property, getting accurate advice on property assent is essential. While Assent of Property does not attract Stamp Duty Land Tax, it can have financial consequences for the estate's inheritance and/or Capital Gains Tax, especially if the property appreciates.
Our expert solicitors can help and guide you through the process. Get in touch to find out more.
Replacing an existing owner
To replace a homeowner on your Help to Buy property, you'll need to submit a single application to remove the existing owner and add the new one.
The new owner must meet the same eligibility criteria as the original applicants, including being a first-time buyer and passing an eligibility check.
- Refinancing: If a homeowner wants to refinance their mortgage to secure a lower interest rate or to release equity, they may need to replace an existing owner with a new one. For example, if a homeowner's partner has passed away, they may need to add their adult child's name to the property title to refinance the mortgage.
Tax implications
Inheritance Tax (IHT): If you transfer ownership of your property to a beneficiary during your lifetime, it can potentially reduce the value of your estate for IHT purposes. However, the beneficiary must meet the eligibility criteria for the Help to Buy scheme and is then responsible for repaying the equity loan - seeking professional advice is important.
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The transfer of equity process with a Help to Buy property
Transferring equity from a Help to Buy property follows a similar process to that of other properties.
Apply for a new mortgage or remortgage
- Speak with your current mortgage lender and obtain a decision in principle which will confirm the existing or new lender is happy with the ownership change.
- The lender may need to reassess your mortgage repayments based on the new equity share and the current interest rates.
Get a current market valuation
A Homes England-compliant RICS surveyor will be able to provide a Help to Buy valuation report.
Review the title deeds
- Your solicitor will get the relevant documents from the Land Registry and ensure they accurately reflect the current ownership of the property.
- They will then prepare and complete the necessary legal documents for the transfer.
Sign and witness
The documents are signed and witnessed (the transfer deed to transfer ownership and the mortgage deed to secure the mortgage).
Transfer funds
Your solicitor ensures all funds are transferred to relevant parties.
Land Registry registration
The new owner(s) or changes in ownership are registered at HM Land Registry.
How long can it take to update the Land Registry?
Most routine updates will take between 10-14 weeks, but some delays for more complex changes to the title could take over a year to process and complete.
Stamp Duty (if applicable)
Under rare circumstances, Stamp Duty Land Tax might be payable. Your solicitor will complete the tax document and file it with HMRC.
Consent from Homes England
- Inform Homes England of your intention to transfer equity, they will assess and make sure the proposal complies with the terms of the Help to Buy scheme.
- They may impose certain conditions on the transfer, such as requiring the new owner to meet specific income or affordability criteria.
Transfer completion
Once all the necessary steps have been completed, the Transfer of Equity will be finalised through a TR1 form. The property title will reflect the updated ownership shares at the Land Registry.
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