Transferring equity is the name given to the legal process whereby the ownership on the title deeds of a property is changed without the property having been sold. This includes situations such as a divorce, where one party is removed from the deeds, marriage, when one party is added, or as part of inheritance tax planning when a child or other family member is added to the deeds.
How Much Does Transfer of Equity Cost?
There are two fixed fees involved in every transfer of equity. These are the solicitor’s fees and the Land Registry fee for registering the change of ownership. Additional fees may be levied by the mortgage lender, should searches be required or a re-mortgage necessary.
In certain circumstances, Stamp Duty may be payable on the transfer of equity. This is usually the case when a new partner buys into a property already owned by their spouse and the value of the equity exceeds the Stamp Duty threshold of £125,000. In this situation, the new co-owner would be liable to pay Stamp Duty at 2% on the value of their share that is over the threshold. Usually, there is no Stamp Duty payable when an equity share is gifted to another individual with no financial benefit received. Your solicitor will be able to advise you on the particulars associated with your individual situation.
Transfer of equity costs range from as little as £100 to circa £1000, depending on the complexity. The lowest price range would be applicable to a very simple equity transfer, for example, whereby a parent gifts a proportion of their unmortgaged property to a child or other family member with no financial consideration received.
A more expensive transaction would include adding a new spouse or partner to a high value mortgaged apartment, whereby the mortgage lender would require additional checks to be made to satisfy themselves that the mortgage repayments will continue to be made, and the solicitor would also need to notify the freeholder of the change to ownership.
Generally, transfer of equity costs will be higher where the change of ownership or the value of the equity being transferred is under dispute, such as during a challenging divorce settlement. This would increase the complexity of the case, the timescales and the costs.
It is important to clearly explain the full circumstances of the transfer to your potential solicitor when seeking a quotation to ensure that they provide a comprehensive and transparent quote for their services and any other additional fees that will be payable. This will avoid the risk of being left with an unexpectedly high bill after the completion of the transfer.
In Conclusion
Transferring equity can be a costly process but it is important to ensure that the ownership of a property is correctly recorded with the mortgage lender and Land Registry and this is the correct means by which to achieve this outcome.
