An equity transfer occurs when the owner of a property removes or adds another party or parties to the title deeds. There are several reasons why a property owner might want to complete an equity transfer, such as removing the name of an ex-partner or adding a child to the deeds.
Every transfer of equity is unique, which means that specific costs are likely to vary; however, there are some processes that will occur with every equity transfer. Budgeting for these is important.
Conveyancing solicitor fees
The legal requirements during an equity transfer will need to be completed by an accredited conveyancing solicitor. Fees are likely to range between £150 and £500 but the precise cost will be influenced by a variety of factors, including the value of the property, whether a re-mortgage is necessary, and whether the property is freehold or leasehold.
You will need to account for a variety of additional charges. These include identification checks, which often cost around £8, and the £3 fee associated with obtaining an official copy of the deeds from HM Land Registry. There will also be a fee of between £20 and £125 payable to HM Land Registry to officially record a change in ownership, which will ultimately depend on the price of your property.
Mortgage lender charges
Most lenders will require you to pay a specific ‘change of parties’, which covers the administrative costs the lender will incur when removing or adding a party to a mortgage. Some lenders will also ask for confirmation regarding the condition of the property, which can cost between £50 and £350.
Equity transfer stamp duty
Stamp duty is likely to be the largest cost you will incur when completing the equity change process. The person being added to the deeds will be taking on a percentage of the property’s equity and may also be responsible for a percentage of any mortgage on the property. Stamp duty will need to be paid on both parts if their total exceeds £500,000.
There are many resources online, such as https://www.samconveyancing.co.uk/news/conveyancing/transfer-of-equity-process-3894, that contain interactive tools to help you calculate precisely how much stamp duty you will be required to pay when completing an equity transfer. Additionally, the UK gorvernment website contains a wealth of useful information.
Separation and/or divorce
If you and your ex-partner are splitting your property as part of your divorce and are both on the mortgage and deeds, stamp duty won’t be applicable. If there is a financial dispute between you and your ex-partner, you will be likely to incur a range of other costs that your solicitor will be able to advise you on.