Transfer of Equity
Transfer of equity is the method of addition or removal of individual(s) from the title deeds of a property. Royce Legal Solicitors are experienced in transferring equity. Our specialist team will be happy to be of assistance if you have any questions about the transfer of equity process. We believe in providing prompt and reliable service to our clients. Please get in touch with one of our Conveyancing solicitors by calling 01706 655 592
What is a transfer of equity?
Transfer of equity is the legal process through which ownership of the equity of the property is changed. Equity refers to the value of the home/property. Not inclusive of the outstanding mortgage.
Equity involves the addition or removal of individuals to the property deeds or transferring the property between members of the family. Below are some of the reasons why people seek transfer of equity:
- Divorce or Separation: If a relationship breaks down and you and your partner own the property jointly, a decision will be made on its division. Often, one partner or spouse leaves the property, and the other wishes to buy it entirely.
- Tax efficiency: The property is being gifted to someone like a relative or a friend to increase tax efficiency. If the transfer of equity is for tax purposes, you must seek legal advice before taking any action).
- Following a court order regarding property ownership after a divorce.
- Formation of Trust in regards to the property (e.g. as part of estate planning).
- New relationship: you already own and want to add your new partner to the deeds of the property.
Transferring equity is not a complicated process when owned parties are in agreement. It can become complex when mortgages, taxes, or a dispute arises among the owned parties. In the end, every transfer equity case is different and should be treated accordingly.
What documents are required for a transfer of equity?
First and foremost, it’s easier to transfer equity if all parties are in agreement about the end result. The transfer’s outcome should have at least one legal owner named on the deeds of the property.
To start the process, you need a copy of the official deed to the property. This title will provide information regarding mortgages, charges or any other restrictions on the property that can hinder the transfer. Identity checks are required to start the preparation of the transfer deed.
In the case that the property has an outstanding mortgage, written consent by the mortgage lender will be required for the transfer to proceed. The lender will monitor that the person(s) named on the updated title is able to maintain mortgage payments.
What is the process for the transfer of equity work?
As mentioned, each transfer of equity is different depending on how many people are involved (addition or removal) and if the property has any outstanding mortgages against it.
All involved parties will fill forms agreeing to the changes. The transfer of equity solicitor will then file the paperwork and send it to the Land Registry. There are also Tax Implications if there is an addition of people to the title deeds.
How long does a transfer of equity take?
Approximately it can take four to six weeks, granted the transfer is smooth and owned parties are in agreement. Complex circumstances can extend the transfer of equity to more than six months.
Transfer of Equity costs
There are two obligatory costs with any transfer of equity:
- The legal fees of the solicitor that helps process the transfer, and
- The Land Registry fee when notifying the Land Registry of the new deed.
Beyond this, there are various other fees throughout the process that arise due to the complexity of the transfer. For instance, “search fees” if your lender requires new searches, modification of existing mortgage or if you are taking out a new mortgage.
If you buy a share of the property or take a mortgage above £125,000, you will have to pay SDLT at a rate of 2% on anything above (£125,000) this threshold. This charge may not apply in all circumstances of the transfer. For a detailed breakdown of cost, please contact one of our Residential Conveyancing solicitors by calling (insert number).
Transfer of Equity and Stamp Duty
The Stamp Duty Land Tax (SDLT) is paid when transferring land or property. A number of factors are considered to determine whether you are required to pay Stamp Duty. These include the type of transfer and your marital status.
Stamp Duty only applies when you are transferring a share in the property to a partner on marriage, a civil partnership or cohabitation. In this situation, the Stamp Duty will only be paid if the monetary value exchanged for the property (referred to as the ‘changeable consideration’) exceeds the Stamp Duty threshold of £125,000. As mentioned above, you only pay Stamp Duty, at 2% and on the portion of the consideration that exceeds this threshold.
The following are situations in which Stamp Duty is not applicable:
- If the reason for the transfer of equity is divorce, separation or dissolution of civil partnership, Stamp Duty is not applied. However, for unmarried couples, (if they separate and one party takes a larger share of the property or buys out the other party completely). They will have to pay Stamp Duty on any monetary value exchanged for the property above the £125,000 threshold.
- The transfer is a gift which means that the receiving party is not exchanging anything for their equity – therefore, no Stamp Duty will be applied.
- You received the property under terms of a will; no Stamp Duty.
If you are unclear whether your transfer will need Stamp Duty fees, please contact one of our conveyancing solicitors for guidance.
How can Royce Legal Solicitors help in the transfer of equity?
Transferring equity is a complicated process regardless of your circumstances. Our solicitors believe it is crucial to protect your interest when carrying a transfer. While some transfers are straightforward, others require lots of legal documentation. Alongside, obtaining the lender’s consent and the possibility of paying SDLT. Seeking expert legal advice and assistance from an appropriately qualified solicitor can ease this process for you.
Royce Legal solicitors have a wealth of experience when it comes to transferring equity. We have an excellent track record, and our solicitors are committed to reaching the best outcome for you, no matter how complicated the transfer is.
Call us today 01706 655 592 for more information about this service or to get a quote for your transfer of equity fees.