What Is a Transfer of Equity?
A transfer of equity is the legal process of adding a person to or removing a person from the title deeds of a property, without selling the property. It is one of the most common property legal transactions in England and Wales — and one that is often misunderstood or underestimated in its complexity.
Common situations in which a transfer of equity is needed:
- Divorce or separation — one party transfers their share of the matrimonial home to the other as part of financial settlement
- New relationship — a homeowner adds a new partner to the property title
- Family gift — a parent transfers equity in a property to an adult child
- Inheritance tax planning — restructuring property ownership for estate planning purposes
- Buy-out — one co-owner buys out the other's share
- Changing ownership proportions — adjusting the beneficial interests of joint owners
Mortgage Lender Consent: The Critical Step
If the property has an outstanding mortgage, you cannot complete a transfer of equity without your lender's formal consent. This is because the lender's mortgage is secured against the property, and the personal covenants of the current borrowers are part of that security.
The practical implications depend on the direction of the transfer:
Removing a Person from the Title (and Mortgage)
The remaining owner must satisfy the lender that they can afford the mortgage payments on their sole income. The lender will carry out a new affordability assessment — and if the sole income is insufficient, the lender may refuse consent, potentially requiring a remortgage to a new lender with revised terms.
Adding a Person to the Title
The lender must consent to the new co-owner being added to the mortgage. The lender will assess the new co-owner's financial position and creditworthiness. Some lenders require a full remortgage application rather than a simple consent to transfer.
Stamp Duty Land Tax on Transfer of Equity
SDLT applies where "chargeable consideration" passes in a transfer of equity. The chargeable consideration includes:
- Any cash payment for the share being transferred
- The proportion of any outstanding mortgage assumed by the new or remaining owner
If no consideration passes — for example, an outright gift between family members where there is no mortgage — no SDLT is due.
Divorce and Relationship Breakdown
Specific SDLT relief is available for transfers of equity between divorcing or separating couples where the transfer is made pursuant to a court order or formal separation agreement. Under this relief, the transfer may be treated as non-chargeable even where a mortgage is assumed. This relief requires careful structuring and advice from your solicitor.
Declaration of Trust
When adding a new owner to a property title, or changing the proportions of existing joint ownership, it is often advisable to also prepare a Declaration of Trust. This is a legal document that records precisely how the beneficial (financial) interest in the property is held between the co-owners — including what happens to the proceeds if the property is ever sold.
A Declaration of Trust is particularly important where:
- The owners are not contributing equally to the purchase price or mortgage
- One party has contributed more towards improvements or extensions
- The parties are not married (married couples have different rights on relationship breakdown under family law)
The Transfer of Equity Process
How Long Does a Transfer of Equity Take?
A straightforward transfer of equity typically takes 4–8 weeks, assuming mortgage lender consent is obtained promptly. Where a remortgage is required alongside the transfer, the timeline extends to 8–12 weeks.
What Does a Transfer of Equity Cost?
- Legal fees: Typically £500–£900 for a straightforward transfer of equity (plus disbursements)
- Land Registry fees: Based on the value of the consideration (can be zero if no consideration passes)
- SDLT: As calculated above — potentially zero if no consideration passes
- Lender's legal costs: Some lenders charge for providing consent; others do not
