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Transfer of Equity

A transfer of equity, (equity being the difference between the value of a property and the amount owed on a mortgage) is where a person is added to or removed from the title of a property without it being sold, such as:

• A sole owner adding their husband or wife – When two people get married/cohabit and have a property that is owned by one person only, then it is often the case that they will wish to transfer it into joint names.
• A couple who are separating – After a divorce or separation, the parties may have to transfer a jointly owned property into just one person’s name so that only one of them legally owns it.
• Tax reasons – Accountants may advise that the owners of a property carry out a transfer of equity, to their children or other family members. This financial sharing of the home can be more tax efficient.

If there is a mortgage on the property, it will be necessary to change the mortgage deed as well.

Different types of transfer of equity can involve:

• Transfer of equity with no mortgage;
• Transfer of equity with a mortgage or money changing hands;
• Transfer of equity for a leasehold property.
• Transfer of equity: no mortgage

If there is not a mortgage on the property, and no money is to change hands, then the process is fairly straightforward. Your solicitor or licensed conveyancer should be able to complete the transfer quickly, though this will depend upon on how fast the information and documentation required is provided. Fortunately, the Land Registry only takes a few weeks to actually register the new position in respect of the ownership of the property.

Transfer of equity: with a mortgage/money changing hands

If you wish to add or remove a person from the title of a property, and there is a mortgage already in place, permission will be needed from the relevant mortgage company. This is because the names on the mortgage deed will have to match the names on the transfer deed. This complicates the process a little and makes this kind of transfer of equity slower that if there is not a mortgage present.

Similarly, if money is changing hands, for example if a person is being removed from the title of the property and the remaining owner is buying their share, e.g. where a couple is splitting up, then again the transfer of equity is a little more complicated and additional fees may have to be paid, which could include:

• Stamp duty – This may have to be paid as anything of monetary value that is given in exchange for the property is referred to as ‘consideration’. This could include a cash transfer or a mortgage, however is only paid where the consideration is greater than, currently, £125,000.00 or £40,000.00 where a second property is apparent. The amount of any stamp duty to be payable will depend upon the sums involved, such as how much the property is worth, the value of any mortgage, etc.
• Search indemnity insurance – If there is a mortgage on the property, the mortgage company involved may ask that search indemnity insurance is obtained. This insurance is put in place rather than the cost of numerous searches having to be met and will protect the Mortgage company from losses if anything that would have been revealed in the searches adversely affects the value of the property. The cost of this one-off insurance is usually around £50.00 or so.
• Land registry fee – The Land Registry will charge a fee for changing the details of the owners of the property. The amount of this will, again, depend upon the sums involved. This cost of the fee is between £20.00 and £455.00.

Transfer of equity for a leasehold property

If the property to in question is leasehold, as well as the usual costs associated with a transfer of equity, it is likely that the freeholder or landlord will charge their own administration fees. Enquiries will be made of them and your solicitor or licensed conveyancer will let you know how much these will be.

Transfer of equity process

If the property has a mortgage on it, the solicitor or licensed conveyancer will write to the mortgage company to request their consent to the transfer of equity at the very start of the process. 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, or, 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 the solicitor or licensed conveyancer and provided to the outgoing or incoming owner for signature.

Once the transfer deed has been signed by the relevant person, it will then be signed by you and, if necessary, by your mortgage company.

Finally, if any money is being paid to the outgoing or incoming owner, this will be required before completion of the transfer of equity can take place.

As you can see, a transfer of equity can be a complicated process and you should always do your homework to find the best solicitor or licensed conveyancer, such as at Metcalfe David Eyres Sheffield or Chesterfield.