How to Buy Out a Jointly Owned Property

Buying out a joint owner and transferring a property into your sole name involves paying for their share of the equity and, where there is an existing mortgage, arranging for the mortgage to continue in your sole name, subject to the lender's approval. Whether you are separating from a partner, rebalancing family assets, or carrying out estate planning, a formal Transfer of Equity is the legal process used to transfer ownership shares in a property, with the change registered at HM Land Registry where required.

If the transfer is not handled correctly, it could lead to issues with the mortgage lender or a future claim from the departing owner.

In this article, we explain the stages of buying out a joint property, how to calculate equity, financing options, tax rules, and the legal requirements involved in executing a Transfer of Equity.

Want more help? If you want to find out more about your property rights when separating from a partner, read our guide: Property Rights When Separating: Joint Owners.

Why transfer a joint property into sole ownership?

A buyout or transfer of equity can happen for many reasons, including:

• Separation or divorce: Dividing joint assets following a relationship breakdown, civil partnership dissolution, or divorce settlement.
• Death of a joint owner: If property was held as joint tenants, ownership automatically passes via survivorship, but title deeds must be updated and this can involve using a Deceased Joint Proprietor Form. If it is held as tenants in common, the deceased owner's beneficial share generally forms part of their estate and passes under their will or the intestacy rules. The steps needed to update the registered title will depend on the circumstances.
• Tax and financial planning: Changing legal or beneficial interests to rebalance household finances or reduce income tax on rental properties.
• Removing a family member or gifted deposit provider: Releasing a family member or former partner from title deeds once sole financing is available.
• Resolving family disputes: Restructuring property shares to prevent future conflict.

How to calculate a buyout figure

The amount you need to pay a joint owner will usually depend on the property's current value, the outstanding mortgage and each owner's share of the property.

The property's equity is calculated by deducting the outstanding mortgage balance from its current market value. The departing owner's agreed share of that equity provides the starting point for calculating the buyout payment, although the final amount may depend on the ownership arrangements and any agreed adjustments.

A simple way to calculate the starting point is:

1. Calculate the equity: Deduct the outstanding mortgage balance from the property's current market value.
2. Calculate the starting buyout amount: Multiply the equity by the departing owner's agreed share of the property.

For example, if a property is worth £300,000 and there is £180,000 left on the mortgage, there is £120,000 of equity. If the property is owned equally, the departing owner's 50% share would be worth £60,000.

The final buyout figure may be different from this basic calculation in some circumstances. For example, where joint owners are separating, there may be adjustments for payments one owner has made towards the mortgage or property after separation, or for one owner having had exclusive use of the property. These can affect how the equity is divided between the owners.

If the outstanding mortgage is greater than the property's current value, the property has negative equity. This can make a buyout more difficult because there is no positive equity to divide between the owners. The owners will need to consider how the shortfall will be addressed, and the departing owner will remain liable for the mortgage unless the lender agrees to release them from liability.

What legal restrictions could affect a property buyout?

Before a property buyout can be completed and registered, your conveyancing solicitor will check the title register for restrictions or other requirements that could affect the transfer. Depending on the property and how it is owned, you may need additional documents, consent from another party or further steps before the change in ownership can be registered.

A Form A restriction is commonly entered where a property is held on trust, including where co-owners hold the beneficial interest as tenants in common. It generally prevents a sole registered proprietor from registering a disposition of capital unless the relevant requirements are met, helping to protect beneficial interests under the rules on overreaching. Your solicitor will check how the restriction affects the proposed transfer and whether any additional steps are needed.

Form LL restrictions are protective measures requiring a qualified solicitor or conveyancer to verify identity before a transfer can proceed.

A Form B restriction may require a specified consent or certificate before certain dispositions can be registered. Its effect depends on the wording of the restriction and the underlying trust arrangements. Your solicitor will check whether consent is required and what evidence HM Land Registry needs to register the transfer.

What is the process for buying out a joint owner?

Buying out a joint owner usually involves six main steps. The exact process can vary depending on your mortgage, how the property is owned and whether it is freehold or leasehold.

Start by checking the HM Land Registry title to confirm who legally owns the property and whether any restrictions need to be dealt with. The title register does not usually show the owners' exact beneficial shares, so check any relevant Deed of Trust or other ownership agreement as well.

If there is an existing mortgage, the lender will need to agree to remove the departing owner from the mortgage. The remaining owner will usually need to pass an affordability assessment for the mortgage to continue in their sole name. If this is not possible, you may need to consider remortgaging with a different lender.

The owners need to agree how much the property is worth, either by obtaining an independent valuation or agreeing a market value between themselves. You should also obtain an up-to-date mortgage redemption statement and check whether there are any other secured debts against the property.

The buyout amount is normally based on the departing owner's agreed share of the property's net equity. This means taking the property's current value, deducting the outstanding mortgage and any other relevant secured liabilities, and then applying the agreed ownership shares. The final payment may also reflect other adjustments agreed between the parties.

The remaining owner needs to arrange the money required to buy out the other owner's share. This could come from savings, a further advance or a new mortgage. Your solicitor may need proof of funds before the Transfer of Equity can proceed.

If a mortgage is being changed or replaced, the lender will usually carry out its own checks and issue a mortgage offer before completion can take place.

A conveyancing solicitor will deal with the legal transfer of ownership and any associated tax requirements. They will check the title, carry out the necessary identity checks and prepare the Transfer of Equity, usually using Form TR1.

Both parties will normally need to sign the transfer deed. If the property is leasehold, your solicitor will also check whether the freeholder or managing agent needs to consent to the transfer and whether any outstanding service charges or ground rent need to be dealt with.

On completion, the remaining owner's mortgage funds or other funds are used to pay the agreed buyout amount to the departing owner. The transfer of ownership takes effect and the departing owner is removed from the property's title and, where applicable, the mortgage.

Your solicitor will check whether the transfer gives rise to any Stamp Duty Land Tax (SDLT) and, where required, submit the SDLT return and arrange payment. If SDLT is payable, the return and payment are generally due within 14 days of the transaction's effective date.

Finally, your solicitor submits the completed transfer to HM Land Registry so the title can be updated to show the remaining owner as the sole legal owner.

Financing the buyout and mortgage approval

To buy out a joint owner, you need to have enough funds to pay their agreed share of the property's equity and, if there is a mortgage, satisfy the lender's requirements for taking it on in your sole name. The money for the buyout may come from:

• Personal savings: Using your own funds to pay the departing owner their agreed equity share, while the existing mortgage remains in place, subject to the lender agreeing to remove the departing owner.
• A further advance: Borrowing additional money from your existing mortgage lender to help fund the buyout, subject to affordability and the lender's criteria.
• Remortgaging: Taking out a new mortgage for a larger amount, using the additional borrowing to fund the payment to the departing owner.

If there is a mortgage, the lender will normally carry out an affordability assessment to make sure you can meet the repayments on your own. If you cannot meet your existing lender's criteria, you may need to consider remortgaging with another lender or exploring alternative borrowing options.

It is important to get mortgage approval before committing to the buyout, as you may not be able to complete the transfer if you cannot secure sufficient finance.

What happens if the other owner refuses to sell or transfer?

If a joint owner refuses to agree to a buyout or sign the transfer documents, you generally cannot complete the transfer without their cooperation or an appropriate legal route. The options available will depend on the ownership arrangements and circumstances.

Your main legal options are:

• Mediation: Using an independent mediator to help the owners reach an agreement without going to court. Mediation may be particularly useful where the dispute arises from separation or disagreement over the property's value or how the equity should be divided.
• Order for Sale (TOLATA 1996): If an agreement cannot be reached, a person with an interest in the property may be able to apply to court under the Trusts of Land and Appointment of Trustees Act 1996. The court can make order such as force a property sale or compel a transfer. Court proceedings significantly increase costs, so this should remain a last resort.

What are the leasehold requirements when buying out a joint owner?

Leasehold properties can involve additional requirements when transferring ownership. Depending on the lease, you may need to notify the freeholder or managing agent, obtain consent to the transfer, provide a deed of covenant or pay administration fees. Your solicitor will check the lease and title to establish what is required and whether any management information is needed.

If the lease has a relatively short term remaining, this may also affect your mortgage options. A lease extension is not automatically required as part of a Transfer of Equity, but it may be worth exploring if the remaining term could affect lending or the property's value. Your solicitor and mortgage lender can advise on the requirements for your circumstances.

Stamp Duty and Capital Gains Tax considerations

Stamp Duty Land Tax (SDLT)

SDLT may be payable when you buy out a joint owner, depending on the chargeable consideration and the circumstances of the transfer. In Wales, Land Transaction Tax (LTT) applies instead. This can include a cash payment and the share of outstanding mortgage debt you take on. Certain transfers made under an agreement or court order in connection with divorce, dissolution of a civil partnership or legal separation are exempt from SDLT. The rules differ for other arrangements, so your solicitor should check whether tax is payable.

For more detail, see our guide to Stamp Duty on a Transfer of Equity and our guide to transfers between spouses.

Capital Gains Tax (CGT)

Capital Gains Tax (CGT) may be payable when an owner transfers their share of a property, depending on the circumstances. Private Residence Relief may mean there is no CGT to pay on a gain from a property that qualifies as your only or main residence, but the relief is subject to conditions. Transfers between spouses or civil partners who are living together generally take place on a "no gain, no loss" basis. Special rules may also apply to transfers following separation or divorce, including time limits and transfers made under a formal agreement or court order. If the property is a buy-to-let or second home, or the transfer takes place after separation, seek tax advice to establish whether CGT could be due. See our guide to Capital Gains Tax and Private Residence Relief.

How much does it cost to buy out a joint owner?

The total cost of buying out a joint owner depends on legal fees, lender charges, and property value. SAM Conveyancing offers fixed-fee Transfer of Equity services starting at £399 for freehold properties and £499 for leasehold properties.

Here is a breakdown of potential expenses:

• Equity buyout payment: The agreed lump sum paid to the outgoing owner for their share.
• Conveyancing solicitor fees: Legal work to prepare the transfer documents, liaise with the mortgage lender and register the change in ownership. Additional fees may apply if the transaction involves complex title restrictions or other legal issues.
• Mortgage application fees: Product fees, exit fees from your previous mortgage, or valuation fees charged by your lender.
• Property valuation fee: Professional RICS valuation cost (if needed to resolve value disputes).
• Propety transaction tax: Tax may be payable depending on the chargeable consideration, including any mortgage debt taken on, and the circumstances of the transfer.
• Leasehold Notice Fees: Landlord/freeholder administration fees for updating ownership records.

How long does the Transfer of Equity process usually take?

A Transfer of Equity may take around 4 to 8 weeks for a freehold property or 8 to 12 weeks for a leasehold property, although timescales vary. Disagreements over the property's value, ownership shares or other issues can extend the process.

The overall cost will depend on your circumstances, the work required and whether the transfer involves a dispute or court proceedings. For more information, see our guide to the costs of resolving property disputes.

Transfer property ownership into your sole name quickly and hassle-free

Buying out a joint owner requires taking over mortgage liability, calculating exact equity splits, and filing Land Registry updates. We can help you with your Transfer of Equity end-to-end with zero stress.