When property ownership changes, do you need a transfer of equity?

When property ownership changes, do you need a transfer of equity?

Joshua Hammond, Solicitor, Residential Property

Changes in personal circumstances often bring changes to property ownership. Whether you are getting married, separating, or transferring a property to a family member, you may need a transfer of equity.

Understanding when a transfer of equity is required and how it works, can help you avoid delays, unexpected costs and legal complications.

What is a transfer of equity
A transfer of equity is the legal process used to change the ownership of a property where at least one of the existing owners remains on the title.

Rather than selling a property entirely, a transfer of equity updates who legally owns it, reflecting changes in personal or financial arrangements.

When is a transfer of equity required
Examples of when a transfer of equity is required are:

• Divorce or separation: where ownership is transferred into one party’s sole name
• Marriage or cohabitation: when adding a spouse or partner to the title
• Family arrangements: such as transferring property to a child or other relative

Each situation carries different legal and financial considerations, so it is important to obtain advice tailored to your circumstances.

Transfers of equity following divorce
One of the most common reasons for a transfer of equity is divorce.

Where a Court Order is made as part of divorce proceedings to finalise a financial settlement, the Court may order that the property be transferred into the name of one party only.

In these circumstances:

• The transfer is legally binding.
• Stamp Duty Land Tax (SDLT) is usually not payable, provided the transfer is made pursuant to a Court Order.

What if the property has a mortgage?
If the property is subject to a mortgage, the lender’s involvement is essential.

Before a transfer of equity can proceed:

• The mortgage lender must consent to the transfer
• The lender may impose conditions or require additional documentation
• In some cases, the lender must sign the transfer deed

This step is crucial, as a transfer cannot be completed without the lender’s approval.

Will Stamp Duty Land Tax apply?
Stamp Duty Land Tax does not apply to all transfers of equity, but it can arise in certain situations.

SDLT may be payable if:

• The outgoing owner receives a payment, or
• One party takes responsibility for an existing mortgage

Because SDLT rules can be complex, taking legal advice early can help you understand whether a liability may arise.

How Hay & Kilner can help
Our experienced team are on hand to guide you through every step of the transfer of equity process. We will:

Review the title documents and identify any restrictions affecting the property

• Verify the identity of all parties involved
• Prepare the necessary legal documents, including the Transfer Deed
• Liaise with mortgage lenders and third parties where required
• Arrange the signing of all legal documents
• Update HM Land Registry to reflect the new ownership and any mortgage arrangements

Clear advice when ownership changes
A transfer of equity is a significant legal step, often undertaken at an already stressful time. At Hay & Kilner, we provide clear, practical advice to ensure your property transfer is completed smoothly, correctly and with minimal disruption.

If you would like advice on whether a transfer of equity is required, get in touch, our team is here to help.