How to Buy Out a Jointly Owned Property
If you own a property with someone else, there may come a time when one of you wants to move on while the other wants to keep the property. This could happen after a separation or divorce, or because your circumstances have changed.
Buying out a jointly owned property follows a formal legal procedure known as a Transfer of Equity, which transfers beneficial interest and removes a departing co-owner from both the title deeds and the mortgage.
If the transfer is not handled correctly, it could lead to issues with the mortgage lender or a future claim from the departing owner. You may also want to add someone else to the Title Deeds in the future and update the Deed of Trust.
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.
If you are thinking of transferring a jointly owned property into sole ownership, read our guide: Transfer of Property Ownership From Joint to Single.
- Legal and title updates: A Transfer of Equity alters beneficial ownership, updates HM Land Registry title deeds, and formally releases the departing co-owner from mortgage liability.
- Stamp duty land tax rules: SDLT exemption may apply when divorcing, separating spouses or civil partners transfer property under a formal Court Order or written separation agreement. For other transfers between spouses or unmarried co-owners, SDLT may be payable if the amount of chargeable consideration exceeds the applicable threshold.
- First-time buyer relief restrictions: A joint owner cannot claim First-Time Buyer SDLT relief when performing a buyout, as holding an existing legal or beneficial share (worth £40,000+) in a residential property already disqualifies them from First-Time Buyer status under Schedule 6ZA of the Finance Act 2003.
- Identity verification and bankruptcy searches: Unrepresented departing owners will need to complete ID1 verification or certified digital ID checks, and property solicitors will need to perform K16 Land Charges bankruptcy searches before releasing funds.
- Capital Gains Tax and PRR preservation: While standard Private Residence Relief (PRR) covers the first 9 months after moving out, an unmarried partner who has not bought a new main residence can choose under Section 225B TCGA 1992 to preserve CGT relief right up until completion of the buyout. If the process exceeds 9 months, an independent valuation dated at the point of transfer must be secured to calculate Capital Gains Tax.
When is a property buyout needed?
A property buyout can happen for many reasons, including:
- Divorce or separation: One partner wants to move out, while the other wants to stay in the home and buy their share.
- One person wanting to move somewhere else: One co-owner decided to relocate for work, family or lifestyle reasons, while the other wants to remain in the property.
- Changes in financial circumstances: One of the owners can no longer afford to pay their share of the mortgage, so the other takes over their share.
- One of the partners wants to sell their share: Rather than selling the whole property, the remaining owner buys out their co-owner.
- Change in living arrangements: One person wants to move with a new partner or family member, while the other wants to continue living in the jointly owned home, or the person who wants to stay in the house wants to add someone new to the Title Deeds,
- An inheritance or change in ownership: A co-owner may want to give up their share of the property, leaving the other owner as the sole owner.
- Death of a joint owner: If a co-owner passes away, ownership may transfer to the surviving owner depending on whether the property was held as joint tenants or tenants in common, sometimes requiring a buyout of the deceased's estate or beneficiaries.
What is the process when buying out a jointly owned property?
The process of buying out a jointly owned property usually involves five main stages:
Check ownership and existing arrangements
Check the HM Land Registry title and any Deed of Trust to confirm who the legal owner(s) is and how the beneficial interest is divided. If necessary, a Notice of Severance (Form SEV) can be used to change a joint tenancy. During a dispute, separating parties should also consider whether joint mortgages or shared credit facilities need to be restricted to prevent further borrowing.
Find out the property's value and outstanding debt
Get an independent RICS valuation or agree on the property's market value between the parties. If the property is leasehold, check the remaining lease term. Request up-to-date mortgage redemption statements for the main mortgage and any other secured borrowing.
Calculate the buyout sum
Calculate the property's net equity by deducting the mortgage debt, second charges and relevant transaction costs from the property's market value. Apply any appropriate equitable accounting adjustments, then calculate the departing owner's share based on their agreed entitlement.
Arrange finance and get approvals
The remaining owner must arrange finance to fund the buyout and satisfy the lender's requirements. This may involve a release of liability or a transfer of title, a product transfer, a further advance, or a full remortgage. The property solicitor may also carry out bankruptcy searches and get any required third-party consents.
Complete the transfer
The parties sign the TR1 transfer deed and complete any required ID1 identity checks. Where necessary, the solicitor gets the freeholder's consent to the transfer or a Deed of Covenant. The buyout funds are transferred through the property solicitors, any applicable Stamp Duty Land Tax (SDLT) is dealt with, and the transfer is submitted to the Land Registry for registration.
What happens if you fail the mortgage affordability assessment?
Lenders do not automatically agree to remove a joint borrower from a mortgage. Instead, the remaining owner must pass a full individual affordability assessment. If they fail this financial stress test, the buyout cannot be completed, even if both parties have already signed the TR1 transfer deed.
Expert Tip: Do you need a property solicitor to buy out a jointly owned property?
You do not always need a property solicitor to complete the Transfer of Equity, although there might be cases when a professional's help is needed, especially when it comes to dealing with complex situations. For example, an unrepresented owner may need a property solicitor to complete an ID1 identity check, or one of the partners might need a solicitor's advice on the best next step.
If you are buying your partner's share for an agreed sum, a property solicitor can handle the paperwork, mortgage arrangements, legal checks and registration with the Land Registry. If the property is mortgaged, the lender might also have their own requirements.
Using a property solicitor can also put you at ease, by making sure the departing owner is removed from both the legal title and/or the mortgage (if necessary), so there is a clear record of the buyout.
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How do legal ownership, beneficial interest, and Deeds of Trust work together?
If you want to understand who owns a property and who is entitled to its value, it helps to know the difference between legal ownership and beneficial ownership.
Term | What it means |
|---|---|
Legal ownership | The registered owners shown at HM Land Registry hold the legal title to the property. |
Beneficial ownership | Determines who is financially entitled to the property's value or sale proceeds. |
Joint Tenants | The owners hold the property together with equal rights. When one owner dies, their interest normally passes automatically to the surviving owner(s). |
Tenants in Common | Each owner has a defined share in the property. The shares are often recorded in a Deed of Trust, which can set out how the property's value and sale proceeds are to be divided. |
A person who is not named on the legal title, or who has contributed financially without receiving a corresponding legal share, may still establish a beneficial interest. This can arise by way of a constructive trust or, in some circumstances, by way of proprietary estoppel. However, where a marriage or civil partnership is being dissolved, the position can be affected by court orders under the Matrimonial Causes Act 1973. In such cases, the court may make orders that override or alter the practical effect of a Deed of Trust, considering factors such as financial needs and the welfare of any children.
Where a non-owning spouse or civil partner is involved in a dispute over a proposed buyout, they may be able to protect their occupation rights by registering a Home Rights Notice using form HR1 at the Land Registry. This creates a Class F land charge and can help prevent the sole legal owner from selling or mortgaging the property without addressing those rights while the buyout negotiations are ongoing.
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- Implications of severing a joint tenancy.
- How to force a sale.
- Calculating your share in the property.
- Applications to court, including Declaratory Orders, Regulatory Orders, and Occupational Rent.
How do you calculate equity and handle negative equity?
The buyout calculation is based on the property's net equity and the departing owner's percentage share:
Property value − mortgage and other costs = net equity → × departing owner's percentage share = basic buyout sum → ± equitable accounting adjustments = final buyout sum
Net equity is calculated by deducting the outstanding primary mortgage, any second charges, redemption fees and transaction costs from the property's current market value. The departing owner's basic buyout sum is then calculated by multiplying the net equity by their percentage share.
For example, a £300,000 property with a £180,000 mortgage has £120,000 of net equity. If the property is owned 50/50, the departing owner's basic buyout sum is £60,000, before any equitable accounting adjustments.
Equitable accounting adjustments may then be applied to reflect post-separation payments and occupation. These may include crediting the remaining owner for 100% of mortgage capital repayments and eligible property maintenance costs, offset against any occupational rent due to the departing owner for exclusive occupation.
If the mortgage debt exceeds the property's market value, there is negative equity. The departing owner may need to contribute cash towards their share of the shortfall before the lender formally releases them from their mortgage liability.
How can you finance the buyout of a joint owner?
- Remortgage using equity gain: The remaining owner can apply to remove one owner from the mortgage or transfer the property into their sole name, potentially keeping their current fixed mortgage rate to avoid Early Repayment Charges (ERCs), or increase the mortgage or remortgage to pay off the departing owner.
- Joint Borrower Sole Proprietor (JBSP) mortgages: Struggling buyers can explore Joint Borrower Sole Proprietor (JBSP) mortgages to add a family member’s income (such as a parent) to boost affordability without placing them on the title deeds.
- Loan or financial gifts from family: Using cash gifts or family loans to assist with funding the buyout sum, which requires formal legal documentation and lender notification.
- Specialist scheme redemptions: Shared ownership buyouts require housing association approval and resale procedure checks, often involving simultaneous staircasing up to 100% ownership alongside the Transfer of Equity. Help to Buy equity loan redemptions require formal valuation approval and processing through Lenvi (the official scheme administrator) on behalf of Homes England.
Property solicitors will also need to secure formal deeds of release for secondary secured liabilities, such as family loans, second charges, or personal guarantees. On completion, funds are paid through solicitor-client accounts to repay existing lenders, pay the departing owner, and clear registered charges. An internal deed of indemnity does not release someone from their mortgage obligations; unless the lender formally agrees, the departing owner remains legally liable.
What are the leasehold requirements and Building Safety Act 2022 rules?
Leasehold buyouts require LPE1 management packs covering ground rent, service charge accounts, and notice fees, typically costing £300 to £800 and taking between 2 to 4 weeks. The remaining owner will almost always need to secure and pay for a formal Consent to Transfer (or a Deed of Covenant) from the freeholder or management company before the Land Registry will accept the TR1 form.
If you are buying a leasehold property with less than 80 years left on the lease, you will usually need to start a statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 at the same time, as lenders may otherwise refuse a sole-name mortgage.
For leasehold buildings over 11 metres tall or with at least 5 storeys, a Landlord’s Certificate and a Leaseholder’s Deed of Certificate may be required under the Building Safety Act 2022 to confirm protection against historic remediation costs, a status which is preserved for the remaining owner following a Transfer of Equity.
Expert Tip: What are your options if a co-owner refuses to sell or you cannot afford a buyout?
Co-owners can enter formal non-court mediation to negotiate buyout terms or agree on neutral valuations. If negotiations fail or an ex-partner refuses to cooperate, co-owners can apply for a court order under Section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) to compel the sale of the property or force a transfer.
When considering a TOLATA claim, the court evaluates factors under Section 15, including the original purpose of the property purchase, the welfare of children, mortgage lender interests, and whether one owner should receive compensation for being prevented from living in the property.
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Book a FREE 15-minute meeting* with a specialist property dispute solicitor/consultant. They'll listen to your issue and suggest ways forward, including the costs, with No Obligation to use our services after the free meeting.
- How can you force a sale?
- What are you due on sale?
- Mediation and Settlement Agreements.
- Applications to court, including Declaratory Orders, Regulatory Orders, Occupational Rent.
What legal documentation, identity checks, and tax rules apply?
Property solicitors prepare the TR1 transfer deed for registration with HM Land Registry and arrange the required ID1 identity verification where a party is not legally represented. They may also arrange Independent Legal Advice (ILA) if required by the lender. This is commonly required for the departing owner or a guarantor to confirm that they understand the transaction and are entering into it freely, especially where they are giving up ownership rights or remaining liable for mortgage debt.
Before completion, K16 Land Charges searches may be carried out to check for bankruptcy or other insolvency-related entries that could affect the departing owner's interest in the property.
Where a buyout is completed at below market value, there may be additional insolvency risks if the departing owner later becomes bankrupt. In some cases, an insolvency practitioner may seek to challenge the transfer under the Insolvency Act 1986. Depending on the circumstances, an Insolvency Indemnity Policy may be required.
Stamp Duty Land Tax (SDLT) Rules
Transfers between divorcing or separating spouses and civil partners under a formal court order, judicial separation, or written separation agreement are fully exempt from Stamp Duty Land Threshold (SDLT). Transfers between married spouses outside of separation, or between unmarried co-owners, involve SDLT on the chargeable consideration (cash paid plus mortgage debt assumed) where it exceeds the standard residential thresholds.
A joint owner cannot claim First-Time Buyer SDLT relief when performing a buyout, as their existing legal or beneficial interest in the property already disqualifies them from FTB relief under Schedule 6ZA of the Finance Act 2003. When a co-owner buys out another's share in their existing main residence, standard residential rates apply to the chargeable consideration.
The higher rate surcharge for additional properties is 5%, up from 3% for transactions completed on or after 31 October 2024. However, this surcharge does not apply if the remaining owner already owns another property, as long as they are buying an additional share of a property that is already their main home
Capital Gains Tax (CGT) and Private Residence Relief (PRR)
Separating spouses receive up to three full tax years after separation (or indefinitely under a formal court order) to transfer property on a no-gain/no-loss basis under the Finance Act 2023. While standard Private Residence Relief (PRR) covers the first 9 months after moving out, divorcing or separating partners who have not bought a new main residence can elect under Section 225B TCGA 1992 to preserve full CGT relief right up until completion of the buyout, provided the property remains the main residence of the remaining partner.
For unmarried partners, standard PRR apply, covering actual residence plus the final 9 months of ownership. If an unmarried departing owner has moved out for more than 9 months, they may incur a Capital Gains Tax (CGT) liability on their share of the gain unless another relief applies, and they must secure an independent valuation, specifically dated at the point of transfer, to calculate this tax liability accurately.
If the property was gifted to you by your family and you are not sure whether you need to pay Capital Gains Tax, read our blog Capital Gains Tax on Gifted Property to find out more.
How long does the Transfer of Equity process usually take?
The overall process takes 4 to 8 weeks for freehold properties, or 8 to 12 weeks for leaseholds, and if the decision is amicable. However, if there are disagreements, such as how much equity belongs to you, this will be extended.
The process can be completed in a single mediation session in an ideal world. But in some cases, the dispute may go through litigation and even to court. Divorce settlements, for example, could take up to two years.
The costs will usually depend on your circumstances and the legal process involved.
Checklist: How to avoid having problems when buying out a joint property
- Get a clear picture of the property's values: Get an expert valuation, for you to have an objective figure to work with.
- Make sure you know how much of the property you own: Check the Title Deeds and any Deed of Trust to confirm how to divide the property's equity.
- Get your mortgage sorted: Speak to your lender early to confirm you can take on the mortgage and release your partner from their liability.
- Be aware of the costs: Check the SDLT, Capital Gains Tax and any other costs before signing anything.
- Work with an expert: Instruct a property solicitor early in the process to handle the Transfer of Equity and update the Land Registry title.
Frequently Asked Questions
Andrew Boast FMAAT is a qualified accountant, conveyancing specialist and author with over 25 years of experience in the UK property sector. Since beginning his career in 2000 within established SRA and CLC-regulated conveyancing solicitor firms, Andrew has overseen the legal journeys of more than 75,000 clients.
He is the self-published author of the first-time buyer guide: How to Buy a House Without Killing Anyone, and a frequent contributor to mainstream UK media on legislative updates, property law, first-time buyer guides, conveyancing best practices, and stamp duty changes. Andrew specialises in resolving complex title issues, property conflict disputes, and property tax options, streamlining the enquiry process to reduce transaction times and maintaining a client-friendly focus.
Amanda Ambler is a highly accomplished conveyancing specialist with over 15 years of dedicated experience across residential property law, legal compliance, and practice management. Having held senior roles, including Head of Legal Practice and Head of Conveyancing at established UK law firms, Amanda possesses a profound, hands-on understanding of the technical intricacies of the property market.
As the designated Legal Content Reviewer for SAM Conveyancing, Amanda ensures that every guide, legal update, and resource published meets the absolute highest standards of accuracy, regulatory compliance, and factual integrity. Her rigorous review process guarantees that complex property legislation and industry processes are communicated clearly, transparently, and safely for home buyers and sellers alike.
