What is transfer of equity?
Transfer of equity is the process where a person who is currently on the deeds decides to remove themselves from the property deeds and/or add another person on. This is not to be confused with a sale/purchase where the original deed holders must remove themselves completely prior to an individual adding themselves on.
When carrying out a transfer, there cannot be more than 4 current deed owners of the property.
Expert Transfer of Equity Solicitors
Stirling Ackroyd Legals transfer of equity solicitors in London have worked on thousands of equity transfer and will ensure your transfer will run as smoothly as possible.
Reasons for carrying out a deed transfer
There are various situations where you may require a transfer of equity. The most common ones are:
- Divorce or the breakdown of a relationship
- Marriage or a new relationship
- For tax or financial purposes
- Purchasing the equity of the remaining deed owner(s)
Do I need to pay stamp duty?
Stamp duty or Stamp Duty Land Tax (SDLT) may need to be paid if you give anything of monetary value for all or part of a share in property or land. This is called a chargeable consideration.
Working out how much SDLT you pay can vary depending on the situation or circumstance of the property transfer.
Stamp Duty Land Tax is normally applied when you transfer a share of property to a spouse when the following occurs:
- Move in together
- Enter into a civil partnership
You pay SDLT if the consideration given in exchange for the share transfer is more than the currently SDLT threshold for the property type.
Stamp Duty Land Tax will need to be paid if the consideration given on exchange for the share transfer is more than the current SDLT threshold for the property type.
If a property is transferred to a company SDLT may be paid on its market value not the considerations given. So, if a properties market value is £150,000 but the company only pays a consideration of £50,000, Stamp Duty Land Tax will still be payable on the £150,000.
Even if no money has been transferred you may still have to pay SDLT
There are occasions where an owner may wish to transfer a share in their property without any money changing hands. An example of this is where a wife decides to give 50% of her property that is subject to a mortgage to her husband.
As the husband takes on 50% of the responsibility to the mortgage lender that amount may then be subject to Stamp Duty liability.
What is the transfer of equity process?
To begin a Transfer of Equity you will need an official copy of the title for the property.
This will then be used to check if there are any mortgages on the property or any other restrictions.
Your Solicitors will then:
- Check the identity of the clients
- Prepare the transfer deed
- Review the tile deeds or property deeds
If there is a mortgage:
The mortgage lender will need to give consent before you are able to proceed with the transfer.
As you are adding someone to the property title, they are equally liable for the mortgage. This also applies in reverse. If you are removing someone from the title the lenders will want to check that the remaining party are able to sustain the repayments before confirming the transfer.
Your solicitor will then contact the mortgage lender to obtain written consent for the transfer. Be aware that the lender may wish to adjust the terms of the mortgage before consenting. Once this is received the transfer may continue.
If there is no mortgage:
The current owners of the property sign the transfer deed in the presence of a witness and the solicitor will then register the transfer deeds with land registry. If the transaction is above £40,000 a stamp duty certificate is needed.
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