What is a transfer of equity?
A transfer of equity is a conveyancing transaction that changes the legal ownership of a property without a full sale taking place. At least one of the original owners must remain on the title for the transaction to qualify as a transfer of equity rather than a straightforward sale. This distinguishes it from a normal conveyance and generally makes it quicker and less expensive.
The transaction is recorded using a TR1 form, which is the standard Land Registry transfer deed. Your conveyancer prepares and submits this document, updates the registered title at HM Land Registry, and handles any stamp duty or tax obligations that arise. While it is technically possible to submit a TR1 without a solicitor, lenders always require professional representation if a mortgage is involved.
Transfers of equity are more common than many people realise. They arise after divorce, when couples marry and want to add their spouse to the deeds, when parents help children onto the property ladder, and when co-owners restructure ownership for tax or estate-planning reasons. Each scenario has its own legal and tax nuances, so taking professional advice before starting is always worthwhile.
Common reasons for a transfer of equity
You change who is named on the title without selling the whole property when you want to:
- Add a spouse or partner to the deeds, often after marriage or moving in together.
- Remove an ex-partner after divorce or separation.
- Buy out a co-owner's share, for example a sibling or former business partner.
- Gift a share of a property to a family member, often for inheritance-tax planning.
- Restructure ownership proportions between existing co-owners.
- Transfer a property into or out of a trust as part of estate planning.
How a transfer of equity works step by step
1. Instruct a conveyancer
A solicitor or licensed conveyancer handles the legal transfer, reviews the title, carries out identity checks and runs bankruptcy searches against all parties.
2. Obtain lender consent
If the property has a mortgage, the lender must approve the change. They will assess affordability for whoever remains on the loan, and some lenders charge an administration fee at this stage.
3. Agree the consideration
If equity or money is changing hands, agree the value being transferred. This figure determines any stamp duty liability and any capital gains tax exposure if the property is not a main residence.
4. Sign the TR1 transfer deed
All current and incoming owners sign the TR1 deed in the presence of a witness. Any agreed payment or mortgage debt transfer takes place at this point.
5. Pay any stamp duty
If stamp duty is due, your conveyancer submits the SDLT return (or LBTT or LTT return in Scotland and Wales) and pays within the statutory deadline.
6. Register the change at Land Registry
Your conveyancer lodges the application with HM Land Registry. The new ownership is then reflected on the registered title, usually within a few weeks.
Transfer of equity costs
Costs are far lower than a full sale and purchase, but several charges still apply.
| Item | Typical cost | Notes |
|---|---|---|
| Conveyancing legal fee | £300 to £750 | Higher if there is a mortgage, a complex title or multiple parties |
| Land Registry fee | £20 to £500 | Scale fee based on the value of the equity transferred |
| Identity and bankruptcy searches | £10 to £40 | Required to register the transfer and confirm no insolvency |
| Mortgage lender admin fee | £0 to £300 | Charged by some lenders to process consent to transfer |
| Stamp duty (SDLT/LBTT/LTT) | Variable | Only if mortgage debt taken on exceeds the relevant threshold |
| Indemnity insurance | £20 to £300 | Occasionally required to cover minor title defects |
Ask your conveyancer for a fixed-fee quote that lists all disbursements so there are no surprises.
Stamp duty and tax on a transfer of equity
Stamp duty is the area that catches most people out. Normally a transfer of equity involves no cash payment, so buyers assume there is no stamp duty to pay. However, HMRC treats any mortgage debt that the incoming owner takes on as 'chargeable consideration'. If the incoming owner's share of that debt exceeds the zero-rate threshold (currently £125,000 for residential property in England under standard SDLT rules, or £0 for second properties), stamp duty is payable on that amount.
Example: a couple buys a house together with a £200,000 mortgage. One partner later transfers their 50% share to the other. The remaining owner takes on the full £200,000 liability. With a standard-rate threshold of £250,000 under the current rules, no SDLT would be due in this case. But if the outstanding mortgage were £300,000 and a partner is being added who takes on half (£150,000), that £150,000 could trigger a tax charge depending on current thresholds and rates.
Transfers between spouses and civil partners on a court order or formal separation agreement are generally exempt from stamp duty. Gifts of property to children with no mortgage are also usually exempt. Always ask your conveyancer to confirm the stamp duty position before you proceed.
Capital gains tax can also apply. If the property is not the transferor's only or main residence and the transfer is at market value or involves meaningful consideration, a CGT charge may arise on any gain. Married couples and civil partners are exempt from CGT on transfers between themselves, but friends and siblings are not.
Stamp duty can apply even with no cash
If the person joining the title takes on a share of the outstanding mortgage above the stamp duty threshold, duty may be payable on that 'consideration' even though no money is exchanged. Transfers between spouses on divorce are usually exempt, but check your exact position with your conveyancer before transferring.