Transfer of Equity

The Official Copy of the Register of Title are obtained from the Land Registry at a cost of £3 per title. The Official Copies state who the current legal owners of the property are, what restrictions are on the title and what charges are registered.

If you are getting a transfer of equity mortgage then review the Remortgage Process Explained article about the additional work required.

As highlighted above, getting the consent from your lender for a transfer of equity with existing mortgage if you are paying off a mortgage should be the first thing you do during the transfer of equity process. Without the consent from your mortgage lender your solicitor will not be able to progress your transaction.

If you are getting a new mortgage then your mortgage lender issues their mortgage offer to your solicitor. Different mortgage lenders will have different requirements for their solicitor to adhere to. Whereas some won't ask the solicitor to do anything more than their obligations under the CML, some mortgage lenders request additional information to be provided to them before they will agree for the mortgage to be issued. For example, Paragon Mortgages require the solicitor to provide copies of planning permission, building regulations and rights of way, however Santander Plc doesn't require this.

If there is an existing charge registered on the property, then the solicitor requests for the mortgage lender to provide a current mortgage statement in order to discharge the balance on completion.

If you are getting a mortgage then review the Remortgage Process Explained article about the additional work required.

Different mortgage lenders have different criteria with regards to the local authority search. Some mortgage lenders are happy for you to take out local authority search indemnity insurance, some will not and expect you to obtain either an official local authority search or a personal regulated local authority search (read to find out the difference between official and personal).

This effects you both in the cost and in the time it takes to obtain the desired information. For local authority search indemnity insurance the policy is usually issued within minutes and the costs are as stated in the table to the right.

The cost of a regulated local authority search is can be as low as £135, however the cost of an official local authority search obtained direct from the council can range from £60 up to £300.

There are also some mortgage lenders who require you to provide environmental searches, chancel indemnity and water and drainage searches.

Find out from the CML which property searches or indemnity insurance you need?

The solicitor will take out an OS1 priority search to freeze the title of the property from being able to have any changes applied to it and then complete a bankruptcy search on you. The OS1 costs £3 per title and the bankruptcy search costs £2 per legal owner searched.

The solicitor will be in a position to complete once they are in receipt of:

If there is a mortgage they will then send off the certificate of title to the mortgage lender requesting the release of the mortgage funds in time for completion.

A basic deed of trust will set out your share of the property so that when you sell or transfer your equity in the future, then your share of any gain or loss is clearly stated within a legal agreement.

The solicitor sends you a financial statement before completion detailing the transfer of equity costs and disbursements. This is an example of costs statement for a transfer of equity with an existing mortgage of £200,000 and £50,000 consideration:

* Leasehold financial statements would need to include a notice fee payable to the freeholder to confirm change of ownership and any new mortgage.

Once your transfer of equity mortgage advance is received by your solicitor and you and your solicitor are ready to complete, then your solicitor will redeem your existing mortgage, pay the consideration due to the leaving owner, settle their invoice and any disbursements (online ID check, official copy costs and OS1/bankruptcy). The balance, if any, is then repaid to you. The only amounts left will relate to the Land Registry fees and any costs due to the property being a leasehold.

The process for discharging the old mortgage and registering the new mortgage/owners at the Land Registry can take between 1 to 6 months after completion. The time delay is linked to the Land Registry having a backlog of work. This can be extended further for leasehold properties if the freeholder/managing agent delays in releasing the notice. Delays can be worsened if your service charge and/or ground rent are in arrears so make sure that you have settled these prior to remortgaging otherwise you may have a stand-off with your freeholder not releasing your notice until your service charge account is settled (read more about What happens after completion).

You don’t pay Stamp Duty Land Tax (SDLT) if you transfer an interest in land or property to your partner as part of an agreement or court order because you’re either:

This also applies if the partners either:

In these cases there’s no need to tell HMRC about the transfer, even if the value is more than the Stamp Duty Land Tax threshold.

In all other cases, stamp duty land tax is payable on the total consideration being paid which is set out within the Finance Act 2003, Schedule 4, Stamp duty land tax: chargeable consideration. Consideration can be cash changing hands or the taking on of a debt (such as a mortgage or personal loan). To work out the total consideration you add the cash/money being paid for the share of the property being transferred and the new owner’s share of the existing mortgage/loan debt. If the total consideration exceeds the stamp duty threshold, then stamp duty is payable at the prevailing rate.

The payment (consideration) can take the form of cash, the giving of goods (giving a personal possession in exchange for the land/property), providing works or services (giving work or a service in exchange for the land or property), release from a debt, transfer of a debt, including the balance of an outstanding mortgage.

For example, Jane owns a property and wants to add on her two sisters. The sisters are not paying and consideration. The existing mortgage on completion is £300,000 and no one owns a beneficial interest in any other property.

For Example, John and Mary are not married and decide to separate. They own a £350,000 house with a £250,000 mortgage. John is going to buy Mary's 50% share in the property. As John isn't married to Mary, and half the mortgage (£250,000 / 2 = £125,000) added onto the consideration of £50,000 equals £175,000, then stamp duty is payable.

You should call HMRC for help with Stamp Duty Land Tax queries and to confirm your own personal liability on 0300 200 3510 Opening times: 8.30am to 5pm, Monday to Friday (closed weekends).

Frequently Asked Questions

Do you ever have to pay second home stamp duty with a transfer of equity and remortgage?

The requirement to pay second home rate stamp duty for a transfer of equity remortgage are much the same as for standard conveyancing.

Anyone receiving equity from a transfer of equity is liable to pay stamp duty and according to the rate which they're personally liable for according to the established stamp duty bands.

So a first time buyer, according to the definition set out by HMRC, would pay no stamp duty at all as long as the equity they received (or mortgage debt) and the consideration totalled £300,000 or less. If this total was between £300,001 and £500,000, they would pay normal rate stamp duty minus £5,000 and if the total exceeded £500,000, they would pay normal rate stamp duty.

Someone who wasn't a first time buyer, but who owned no other properties anywhere else in the world, would start to pay stamp duty on remortgage and transfer of equity if this total exceeded £125,000. And anyone who owned any other property anywhere in the world would similarly have to pay stamp duty remortgage transfer equity at the second home rate if the total exceeded £40,000.

Click to use our Transfer of Equity Stamp Duty Calculator

Can you give your child a property via a transfer of equity and remortgage?

The simple answer to this is no under the normal rules of the transfer of equity and remortgage process.

Because this question uses the word 'gift', it implies that the giver would no longer have any ownership of the property. This is important because it means that the giver would be coming off the title entirely and the child would be coming onto it.

The Law Society generally views a transfer like this to be unsatisfactory, because there is the possibility that the person coming off the title suffered undue pressure or influence to act as they did. This could happen hypothetically if a child applied pressure to a remaining parent to give them a property for free in this way.

Transfers of equity are normally undertaken by just one conveyancing solicitor acting for all parties. In the situation described ideally the person coming off the title would have legal representation entirely distinct from the solicitor acting for the person coming onto the title.

This is why a transfer like this would be conducted using a sale and purchase – so that two different solicitor firms are involved and no conflict of interest – although the child receiving the property can be given it without having to pay any consideration.

It's clear also that a remortgage would have no place in this arrangement. If the child was expected to pay anything for the property, they would have to apply for and receive a normal mortgage.

Click to read about Concessionary Purchase

Do you have to pay stamp duty with a transfer of equity and remortgage if you are getting divorced?

The transfer of equity and remortgage process is frequently undertaken by people when they split up, either by simple separation and moving apart or, if they've been formally married, by divorcing.

If you're married and get divorced or have a civil partnership and choose to dissolve it, you don't have to pay transfer of equity and remortgage stamp duty. The standard required, however, is that you have to have an official court order as proof that your marriage or civil partnership has in fact been dissolved.

For any separation where partners didn't get married in the first place or married/civil partners who are merely informally separating and moving apart, they still have to pay stamp duty on remortgage and transfer of equity as normal and might even have to pay second home stamp duty if their circumstances dictate.

Can a lender stop you getting a transfer of equity and remortgage?

Any lender's interest in a transfer of equity and remortgage process is, understandably, about ensuring that their loan is repaid in full and if it isn't, that they have parties whom they can pursue in law for funds owed.

It follows from this that if you had two people originally who both formally contributed to a mortgage debt and one person intends to leave, particularly if that leaving party is to be paid money (a "consideration") for leaving, then the lender involved would want to ensure that the remaining party had sufficient financial capability to carry on making the increased mortgage repayments on their own.

This is why, if your property is subject to a mortgage, it's a legal requirement to inform your mortgage lender if you intend to conduct a transfer of equity. They must consent and, in the scenario described in the previous paragraph, they can decline your request.

However, if someone is coming onto the title and is also coming onto the mortgage, the lender involved is more likely to consent because that 'new' person will either replace the old person as a contributor to paying off the mortgage or will be an additional person on the mortgage paying off the debt. In the latter case, the risk is spread further and another person can be sued under the joint and several liability precept.

So although the lender still has to give consent when another party is coming onto the title, they are more likely to grant the request, although they will still scrutinise the credit rating and financial records of the person or people coming onto the title before consent is given.