A guide to transferring equity in a property

There will be circumstances when you may wish to transfer ownership of a property, outside of a typical purchase or sale transaction. For example, you may wish to gift all or part of a property to a child or buy out an ex-partner after a separation.

Whatever the situation, understanding the process of transferring equity is your first step towards ensuring a successful and straightforward transfer process.

 

What does transfer of equity mean?

In simple terms, your equity in a property is the value of your interest in the property. In other words, it’s how much of the property you own.

When you decide to change the ownership of a property by transferring either in full or in part, this is known as a “transfer of equity”. You are moving the ownership rights to someone else, either for the entire property or some of it.

There are a few different circumstances when the transfer of equity process will apply. Some common examples include:

  • Buying out an ex-partner after divorce or separation
  • Selling your share in a property
  • Buying out a joint owner
  • Adding a new spouse, civil partner or unmarried partner to the title deed of your property
  • Gifting a property or a share in a property to someone else, such as a child or spouse

 

Types of property transfer

There are two options for property transfer in the UK.

Full transfer of ownership

If you are relinquishing ownership of your property in favour of another person, this is called a full transfer of ownership. You may opt for this type of property transfer if you are gifting a whole property to another person, such as a child or other family member, or if you are dividing assets with an ex-partner after a divorce or separation.

Part transfer of ownership

Part transfer of ownership may occur if you only wish to transfer part of your property to another person or if you only owned part of the property in the first place. This may be the case if you are buying out your ex-partner after a separation, or if you want to add a new partner, spouse or child to your property.

 

What is the process?

Whether you are completing a full transfer of ownership or a part transfer of ownership, the transfer of equity follows the same basic process.

Choose the appropriate property transfer form

If you are planning to complete a full transfer of ownership, then you’ll need to complete the Registered Title(s): Whole Transfer Form (TR1).

Compete an ID1 – Certificate of Identity Form

Before the HM Land Registry will process your administrative paperwork for a transfer of equity, it requires you to prove your identity through the completion of an ID1 form. This is not always necessary.  For example if we are acting for the person coming on the title, we would only ask that the person we are not acting for completes an ID1 form.  We would check our clients ID.  This would be applicable if no solicitors were acting at all as mentioned below.

Calculate the HM Land Registry fee

To initiate the processing of your transfer of equity, you’ll need to calculate and pay the appropriate fee. The amount you need to pay is dependent on the type of application you’re making. We also need to check for any Stamp Duty Liability as a form needs to be completed if applicable before we complete and submit the AP1.

Complete the AP1 Form – Change the register form

An AP1 Form is a standard form used by the HM Land Registry. Through completion of the form, you are notifying the HM Land Registry of the property’s change of ownership.

Send the forms to H M Land Registry

Finally, you’ll need to send all of your forms to HM Land Registry, along with any required fee payments.

On the surface, the transfer of equity process is a straightforward legal process that’s relatively inexpensive and pain-free. There’ll even be times when you may not need to instruct a conveyancing solicitor.

However, in practice, the process can become much more complicated. For example, if there’s already a mortgage on the property, then your lender will make it a requirement for you to engage a conveyancing solicitor to carry out the administration. This will be to protect your lender’s interest in your property, and ensure that the transfer process is completed properly.

The transfer of equity process can also become more complicated if the property is a leasehold rather than a freehold property. In general, there are additional steps to complete a transfer of equity in a leasehold property, such as issuing a Notice of the Transfer of Equity to the Freehold Owners or the Management Company, or both.

How we can help

Although you can complete the transfer of equity process without instructing a conveyancing solicitor, it can be a complicated process – even if no money is being exchanged. Given that property transfer can have all kinds of legal and tax implications, such as incurring Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT) or Inheritance Tax (IHT), it’s imperative to get the process right. Waldrons specialist residential property conveyancing solicitors can advise on SDLT but not CGT or IHT.

Here at Waldrons, our team of conveyancing solicitors has in-depth knowledge and expertise to guide you through every step of the equity transfer process. Instructing a conveyancing solicitor means that you are legally protected and gives you peace of mind that the process is completed properly. Get in touch today to discuss your circumstances.

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