The Transfer of Equity Solicitor Process Explained
Transferring property ownership legally is known as a transfer of equity and allows homeowners to add or remove a name from their property without selling. We specialise in this type of transaction, and the reasons for it can vary, such as:
- Adding your partner to your property.
- Removing an unmarried partner.
- Court-ordered transfers such as divorce.
- Gifting property to children.
The process is far more straightforward than a purchase because one of the original legal owners stays on the property, so the solicitor simply needs to add or remove a name at the Land Registry. With lender consent and a signed Land Registry TR1 Form, you're pretty much ready to go.
However, complications can cause a delay, such as an issue with the mortgage, a dispute about how much someone is due to be paid to leave the property, or leasehold enquiries with the freeholder, such as the Building Safety Act 2022.
We cover answers to these challenges below, alongside the tax implications, such as Stamp Duty and Capital Gains Tax, that can arise when transferring equity. If you have a specific question not answered below, give us a call on 0333 344 3234 or email help@samconveyancing.co.uk.
Examples of the Transfer of Equity Process
The steps vary depending on the type of transfer you are completing, so here are some common examples:
Adding someone to the property
When adding someone to the title deeds, you only need to instruct one solicitor to handle the legal work. They'll complete their ID checks and follow these steps:
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1 How much equity? Agree if the person you add is paying for the equity. For example, if you solely own the property and want to transfer 50% to your new partner, are they paying you any money for this?
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2 Lender Consent or New Mortgage. Obtain consent from the existing mortgage lender to remove someone from the mortgage or get a new mortgage in the new owners' name.
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3 (If leasehold). Confirm freeholder notice, settle any ground rent or service charges due, and check if the leasehold is over five stories and part of the Building Safety Act.
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4 Sign Documents. All parties sign the Land Registry TR1 Form with witnesses and (if mortgage) the mortgage deed.
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5 Completion. Solicitor submits documents to Land Registry.
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6 Post-completion. The solicitor files a Stamp Duty return if there is consideration, pays any tax, and the Land Registry updates the registered names, normally within 1 to 6 months.
Our fee starts from as low as £399 INC VAT(i), plus disbursements and completions are submitted to the Land Registry within weeks(ii).
Removing someone from the property
When removing someone from the title deeds, you only need to instruct one solicitor to handle the legal work as long as the removed party is not receiving any money for their equity. However, if the party being removed receives money or explicitly wants a solicitor, two solicitors will be involved: one for the new owners and one for the removed party.
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1 How much equity? Agree on how much you pay to buy out the equity from the party, leaving the title if the person you add is paying for the equity. For example, if you jointly own the property and want to buy out and remove a joint owner, you must agree on how much you owe them for their share in the property.
You may instruct a surveyor to independently confirm the property's value with a current market valuation. -
2 Lender Consent or New Mortgage. Obtain consent from the existing mortgage lender to remove someone from the mortgage or get a new mortgage in the new owners' name.
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3 (If leasehold). Confirm freeholder notice, settle any ground rent or service charges due, and check if the leasehold is over five stories and part of the Building Safety Act.
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4 Sign Documents. All parties sign the Land Registry TR1 Form with witnesses and (if mortgage) the mortgage deed.
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5 ID1 Form. If the party being removed doesn't have a solicitor, they must obtain an What is an ID1 Form? to verify their identity as a mandatory process for the Land Registry. We offer these at the cost of £100.
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6 Completion. Solicitor submits documents to Land Registry.
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7 Post-completion. The solicitor files a Stamp Duty return if there is consideration, pays any tax, and the Land Registry updates the registered names, normally within 1 to 6 months.
Our fee starts from as low as £399 INC VAT(i), plus disbursements and completions are submitted to the Land Registry within weeks(ii).
Transfer of Equity for Divorce
If the transfer of equity is before divorce, or the Divorce Order wants a spouse's name removed from the property, read the Removing Someone section. If your transfer is part of a Divorce Order, that doesn't want to remove the party from the title, read on.
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1 Divorce Order The Divorce Order states who is being removed from the property and the terms under which the ongoing mortgage will be satisfied. In some cases, this may mean no change to the legal title, but a transfer of equity via a deed is required.
Where the order instructs a sale, we can help with a Conveyancing Quote for selling. -
2 Declaration of No Interest. A deed of No Interest is required when a Divorce Order instructs the transfer of beneficial interest but doesn't want the party removed from the title. The deed transfers any benefit in the property from one spouse to another but leaves their name on the legal title and mortgage.
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3 Stamp Duty. There is no stamp duty to pay when the transfer is part of a divorce order or a long-term separation.
We can transfer equity via a deed at a fixed cost of £245 INC VAT and deeds are drafted within 1 to 2 working days(iii).
Transfer of Equity Timescales
The timescale to complete transferring equity is anywhere from 3 to 8 weeks to submit documents to the Land Registry; however, it can be slowed if:
- You struggle to get lender consent to change legal ownership or if you remortgage through a complicated lender such as Paragon.
- There is a dispute over the amount the departing party is due.
- (If leasehold) you haven't paid your service charges/ground rent, the freehold managing agent is slow or absent, or you struggle to confirm the notice fee required for the transfer of leaseholder.
- (If leasehold) your property falls under the Building Safety Act (protection from building defects like cladding). Leaseholder Protections are granted to certain eligible leaseholds that can be lost if you complete an equity transfer before you obtain the requisite certificates. Read more: How do you keep your Leaseholder Protections?
Once the documents are with the Land Registry, the title can take 6 months to be updated with the new owners. Read more: How Can I Beat the Land Registry Delays
What are the tax implications for the equity transfer?
Stamp Duty Land Tax
If you transfer equity and the transaction provides an individual interest in land, stamp duty land tax (SDLT) or Welsh Land Transaction Tax (LTT) will be payable. It isn't at the property's value, like when you buy the property; it is on the consideration paid for the transfer, known as the consideration. Consideration can be money changing hands or taking on the existing mortgage debt.
To work out the total consideration for stamp duty, you add the money paid for the equity and the existing mortgage debt taken on. If the total consideration exceeds the stamp duty threshold, stamp duty is payable at the prevailing rate.
For Example, Jane owns a house valued at £500,000 with an existing mortgage of £400,000. Michelle is transferred onto the property, and they open it 50:50, and Michelle pays Jane £50,000. The total consideration for stamp duty is £250,000; the £50,000 paid, plus the 50% share of the existing debt, £200,000. Use our Free Online Stamp Duty Calculator to confirm the tax payable:
Any stamp duty land tax should be declared and paid to HMRC within 14 days after completion of the transaction; otherwise, you may incur penalties. You can file your stamp duty land tax return with HMRC by clicking here: Gov - File my SDLT and pay any liability by clicking here: Gov - Pay Stamp Duty. If you use a solicitor, they will file your stamp duty return and pay your tax.
You may have to pay the Additional and non-UK resident rates if they apply to you. Read more: How much stamp duty do I pay on an equity transfer?
There is no stamp duty at any rate where the transfer is part of a divorce or dissolution, and no tax return is required.
Capital Gains Tax
You pay CGT when you dispose of equity in a property that isn't your main residence. If your equity transfer is on your main residence and has never been a rental, then there is no capital gains tax to declare or pay, even if you receive money for the equity.
For Example: Jane and Michelle own a house valued at £500,000 with an existing mortgage of £400,000. Michelle is removed from the property and Jane pays Michelle £50,000. The property has been their main home since they purchased the property together. Even though Michelle is paid £50,000, there is no CGT to pay.
There may be CGT if the property wasn't always your main home or if the transfer of equity is on a second home, such as a buy-to-let. Read more: Capital gains tax on a transfer of equity. If you are married there is no CGT to pay on a transfer, whether it is your home or an investment or Buy to Let.
Inheritance Heritance Tax
When you die, you pay inheritance tax on your net assets over a threshold. You can gift an asset up to £3,000 per year; however, if you gift equity over this, the gift falls under the 7-year rule.
| Number of years before death | Rate of IHT on the gift |
| 0 to 3 Years | 40% |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 or more years | 0% |
If you are transferring property as part of Inheritance Tax planning, read more: Gifting property for IHT planning.
There's no Inheritance Tax to pay on gifts between spouses or civil partners.
Transfer of Equity Costs
Varying between solicitors, a quote will land in the region of £450 to £1,000 for the legal Transfer of Equity costs if the property is leasehold and has a mortgage. The costs should include:
- Solicitors fees including ID checks, office copies.
- Land Registration fees.
- (if party being removed) ID1 Form verification fee.
- (if mortgage) Change of mortgage fee.
- (if leasehold) Notice fee to freeholder.
Our solicitor fees for a transfer of equity start from £399 INC VAT. We include all the costs in your Fixed Price quote, so get an instant online Transfer of Equity Quote:
What is the transfer of equity mortgage process?
If you have an existing mortgage, you cannot remove the name of a legal owner from the property and mortgage without the lender's consent.
Where you complete a remortgage and equity transfer, you must apply for a mortgage in the new owners' names. Ideally, you'll have a mortgage in place for the transfer before instructing your solicitor.
If you are remortgaging, your mortgage lender issues their mortgage offer to your solicitor in the name of the new owners. Different mortgage lenders will have different requirements for their solicitors to adhere to.
Some won't ask the solicitor to do anything more than their obligations under the CML, and some mortgage lenders request additional information to be provided before they agree for the mortgage to be issued.
For example, Paragon Mortgages require the solicitor to provide copies of planning permission, building regulations and rights of way, however Santander Plc doesn't require this.
On completion of the remortgage, the existing mortgage is paid off, and the new mortgage is registered at the Land Registry. The remortgage process:
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Mortgage Application for a Decision in Principle
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Mortgage Valuation
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Mortgage Offer
The remortgage is completed at the same time as the transfer of equity, not before it.
Can you do a transfer of equity yourself?
Also known as a DIY Transfer of Equity, while you can technically complete some of the process without a solicitor, you need a solicitor for certain parts:
- ID1 Form. The Land Registry requires an ID1 Form signed by a solicitor for any transfers where a solicitor isn't making the application.
- Form LL. The Land Registry requires a Form LL certificate from a solicitor if there is an anti-fraud restriction.
- Form ST5. You may need to declare a statement of truth to a solicitor to confirm your beneficial interest in the property.
Transfers aren't complex for specialist solicitors like ours, so it is often best to leave the legal work to them and avoid the potential risks.
What are the risks of DIY transfers?
- Land Registry Restrictions. You may encounter restrictions on the deeds that stop you from updating the names of the legal owners. Form A and Form LL restrictions are examples of where you'll need a solicitor to complete the transfer. The Land Registry will reject your application if you don't satisfy the restriction.
- Land Registry Forms. Land Registry forms aren't overly complicated. However, if you make a mistake on the application, it will be rejected.
- Stamp Duty Form. You'll be required to file a stamp duty declaration if the transfer has any consideration, within 14 days of completion, and pay any tax due. The form is often automated through a solicitor for accuracy, whereas you could make an error filling in the form yourself, which could incur a penalty.
- Property Disputes. If one party disputes the payment for their equity, you could face a lengthy legal battle. Having a solicitor involved removes the risk, as the parties must agree on the payment due before completion can take place.
We discuss this in more detail in our article Do Both Parties Need a Solicitor for Transfer of Equity?
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
