Common Reasons for a Transfer of Equity
The Legal Process
- 1Lender's consent — if there is a mortgage, the lender's written consent is required before the transfer can proceed. Where a person is being added, the lender will assess their affordability. Where a person is being removed, the lender must be satisfied the remaining party can service the mortgage alone, or the mortgage must be transferred to a new sole product. A solicitor handles the consent application.
- 2TR1 transfer deed — the TR1 is the Land Registry standard form that effects the legal transfer of ownership. It identifies the transferors (current owners), the transferees (new owners), the property, and the consideration (if any). If equity is being given for no consideration, the TR1 must reflect this. If money is changing hands, the agreed amount is stated.
- 3SDLT calculation — SDLT may be payable even where no money changes hands. Where a person joins the title and assumes responsibility for a share of the outstanding mortgage, SDLT is calculated on the value of that assumed debt. Your solicitor calculates and submits the SDLT return within 14 days of completion.
- 4Land Registry registration — the TR1 and supporting documents are lodged at HM Land Registry. The title register is updated to reflect the new ownership. Where a new mortgage deed has been signed, the new charge is registered simultaneously.
Frequently Asked Questions
Can I transfer equity without the lender's consent?
No. If there is a mortgage on the property, the lender's written consent is required before the transfer can be registered at Land Registry. Transferring without consent would be a breach of the mortgage conditions and could trigger a demand for immediate repayment of the outstanding balance. A solicitor applies to the lender for consent at the outset and the transaction does not proceed to registration until consent is confirmed.
Is Stamp Duty Land Tax payable on a transfer of equity?
Possibly. SDLT is payable on any chargeable consideration. Where the transfer is between spouses or civil partners who are living together, a spouse exemption may apply. Where a person joins the title and assumes a share of the outstanding mortgage, that assumed debt is chargeable consideration for SDLT — even if no money changes hands. Your solicitor calculates the SDLT position before the transfer completes.
Is Capital Gains Tax payable on a transfer of equity?
A transfer of equity is a disposal for CGT purposes. If the property is not your main residence (or has not always been your main residence), CGT may be payable on any gain. Transfers between spouses or civil partners who are living together are usually exempt from CGT under the no gain/no loss rule. A solicitor advises you to seek separate tax advice from an accountant before completing the transfer.
How long does a transfer of equity take?
A transfer of equity with no mortgage typically takes 4–6 weeks from instruction to registration. Where a mortgage lender's consent is required, the timeline depends on how quickly the lender responds — this can add 2–6 weeks. Lenders vary significantly in their processing times, and consent for a removal may require a full mortgage affordability assessment for the remaining party.
Do I need a Declaration of Trust alongside the transfer?
If the beneficial interests of the new joint owners are not equal — for example, one person is contributing more capital and you want to record the different shares — a Declaration of Trust (also called a Deed of Trust) is essential. Without it, land law presumes equal beneficial ownership regardless of what was contributed. Your solicitor drafts the Declaration of Trust alongside the TR1 transfer deed to protect both parties.