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Typical Transfer of Equity Scenarios

I wish to gift my property to my children and still continue living there? What should I consider?

I would want to know why are you considering such a gift? This is not something that we would advise as a general rule. There is a risk that if your children divorce, go bankrupt or die you may have to move out of the property. There are tax implications also on your children when they sell the property.

What are the next steps?

I am divorcing, will stamp duty be paid when I transfer the property to my wife?

No, as the transfer is part of a divorce there is no stamp duty payable.

What are the next steps?

You and your partner are splitting up. You currently jointly own the property, but following the split only one of you is to own it?

If you have a mortgage on the property you will need to obtain the consent of the lender. Once this has been provided you are free to do the transfer. It is possible that they may ask you to reduce the mortgage or introduce another person onto the deeds.

What are the next steps?

You want to transfer the ownership of your property from you to your children

This should never be taken lightly, particularly if you intend to remain living in the property. There are implications on you in the event of your children divorcing, dying or becoming bankrupt.

Also, there are tax implications on them when they come to sell the property. If you are intending to embark on such an arrangement you are advised to take professional advice. If there is a mortgage on the property you will need to obtain the consent of the lender.

What are the next steps?

You own a property alone, you have a partner who is moving in with you and you want them to jointly own the property with you now

If there is a mortgage on the property the consent of the lender is required. Once you transfer the property into another person's name, that person has rights over the property which will prevent you from selling the property without his/her consent.

If the relationship were to fail one party may be entitled to claim off the other in order to be taken off the deeds.

What are the next steps?

I have looked at the title deeds to my property and the lease refers to the original parties in the 1970's. Should my name not be referred to in this document?

It is quite right that the lease referred to in the deeds is the original lease. You name should appear in the 'Proprietorship Register' as being the owner of the property. If this is the case all is in order.

What are the next steps?

I am the outgoing party, do I need to instruct a solicitor?

Not always is the short answer. If you have a mortgage on the property your lender may insist. Please phone to discuss your circumstances in more details.

What are the next steps?

Frequently Asked Questions

What is a Transfer Deed?

In conveyancing, the house transfer deed is the document which officially transfers ownership of a property from one party to another. Depending upon the transaction being carried out, there are four standard forms provided by the land registry (TR1, TR2, TR3 or TP1). TR1 is the form most commonly used, as this covers the transfer of the whole property title from one party (or parties) to another.

If you are looking to carry out a property transfer then it is important to note that there is more involved than simply completing one of the forms above. There are often other factors to consider, such as possible SDLT and CGT implications.

What are the next steps?

Can I transfer equity to someone under 18 years old?

If you want to undertake a transfer of equity of your property to a child under the age of 18, you will require a trust deed to be completed in addition to the equity transfer.

Because anyone under the age of eighteen cannot legally hold the property in their own name the trust deed allows a responsible and trustworthy adult to hold the property until the child is 18.

What are the next steps?

I am considering doing my own conveyancing. What should I be careful of?

In a way you have answered your own question. It is very important that you follow the conveyancing process correctly as failure to do so may result in problems in the future. The process can be complex particularly in the case of leasehold properties. For example, should you be buying a flat you will, among other things, want to check that there is no major building works planned which could result in you receiving a huge bill. We would always advise that you take professional advice.

What are the next steps?

When is a transfer of equity exempt from stamp duty?

When instructing a solicitor to carry out a transfer of equity on your behalf, it is important to be aware that there may be stamp duty payable on the equity transfer.

The Inland Revenue require a Stamp Duty Land Tax (SDLT) form to be completed and signed by the property owner(s) and sent to the Inland Revenue within one month of the date on the transfer deed. There is a fine of up to £200 that is payable for failure to send in an SDLT form within the month, or for failure to send on in at all.

The responsibility to complete and return the stamp duty form is that of the property owner. If you have instructed a solicitor to complete your transfer of equity then they will usually complete the form on your behalf, and arrange for you to sign it and then submit it to the inland revenue on your behalf.

Stamp duty may be payable when an equity transfer for a property is carried out, whether it is sold or gifted. Your solicitor will be able to advise you whether stamp duty is payable. Some equity transfers are exempt from stamp duty, for instance where a property is being transferred as a result of a court order following divorce proceedings.

Some common examples of when a transfer of equity would be deemed to be exempt from stamp duty are as follows:

  1. Following a divorce, as a part of a court order
  2. A divorce or the dissolution of a civil partnership resulting in an equity transfer
  3. A transfer of equity of freehold or leasehold land where no money (consideration) is to be paid from the original owner to the new owner. This would include the gift of a property from a parent to a child.

What are the next steps?

Can I transfer a property to another person to avoid losing the property because of debt, insolvency or bankruptcy?

If a property is transferred for less than its value, it is deemed a gift due to being a 'transfer at undervalue'. If the person who transfers the property becomes bankrupt within 3 years of the donation the law can void or reverse the transfer.

What are the next steps?

Do I need to carry out an SDLT for a transfer of equity?

Every time a transfer of equity is completed a stamp duty land tax form (SDLT) needs to be completed on behalf of the new owner(s).

There is a minimum penalty of £100 for any forms not successfully submitted within 30 days of completion of the equity transfer. Your solicitor will advise you of whether the transfer of equity is exempt from stamp duty or otherwise the amount of stamp duty land tax due.

What are the next steps?

Do I need to inform my mortgage lender that I want to carry out an equity transfer?

Yes. If you wish your existing mortgage to continue then you will need your current lenders consent to any proposed change in the percentage of ownership of a property through a transfer of equity.

Your mortgage lender may make further enquiries with regard to the circumstances of the proposed equity transfer and also check the financial status of the current owner in order to satisfy themselves that the continuing owner(s) will be able to meet the mortgage repayments.

Your lender will contact us with conditions of acceptance which it requires to be met for the mortgage arrangement to continue. The consenting and continuing lender may wish to join in the transfer of equity as a party and in addition execute the document, however this requirement varies from lender to lender.

What are the next steps?

Can I change my mortgage provider at the same time as completing an equity transfer?

If you are remortgaging at the same time as completing an equity transfer you may be able to raise cash for a larger deposit and subsequently gain a more favourable interest rate on the mortgage. The remortgage would be completed at the same time as the transfer of equity.

What are the next steps?

When would a Transfer of Equity take place?

Equity is the difference the current value of a property and the amount outstanding on any mortgage(es) taken out on the property. An equity transfer takes place when one or more joint owners of a property chose to sell or transfer their share of the property another owner or owners of the property. Several common examples when a transfer of equity would take place are as follows:

When cohabitants separate or a divorce takes place The outgoing owner will be released of any mortgage commitments and the parties separating should agree on the amount of money changing hands (if any) as part of the equity transfer. Transfer of property to a family member This type of equity transfer is most commonly carried out when a property is being transferred to a family member who would have otherwise received the property upon the original owners death. The original owner of the property has the peace of mind of seeing the completion of the transfer while still alive. This type of transfer can also sometimes take place on the advice of an accountant. Following marriage adding a spouse's name This can be a gift with no money changing hands. If the spouse is paying below market value for the share in the property then this can be regarded as a 'transfer at undervalue' or a gift. The current owner has an adverse credit rating Transferring a share of equity may assist with a remortgage which would otherwise not complete due to the existing owner having a poor credit rating. This relies on the equity transfer being made to an additional owner who has a good credit rating. Tax planning Property owners are sometimes advised by their accountants to transfer a share of the family home into the name of a child or other relation.

As this is an equity transfer it may be deemed in law as a gift. Transferring or changing the share allocation of the property Some people may buy a property jointly but do not wish to own exactly half of the property each. In this scenario a trust deed will be set up and registered at the land registry to explain the share that each partner owns. If the property owners later decide to change the percentages of the property that they each own a Transfer of Equity would be needed, and in addition the trust deed would need to be changed.

What are the next steps?

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