Transfer of equity: Key considerations and process

A transfer of equity is the legal process that changes the ownership structure of a property. This happens when a person is added to or removed from the title — without a full sale taking place. It’s a common step during life changes such as marriage, separation, or estate planning.

What is a transfer of equity?

A transfer of equity occurs when one or more owners are added to or removed from the property’s title, while at least one existing owner remains.

Common situations include:

• Adding a partner, friend, or family member to the title
• Removing an ex-partner after a divorce or separation
• Adjusting the ownership percentages between co-owners
• Buying out a co-owner’s share
• Gifting part of a property for tax or estate planning purposes

Step-by-step process to transfer equity

Title check and lender consent

Your solicitor will first check that the property can legally be transferred.

If there is a mortgage, your lender must consent to the transaction. The lender will typically assess the financial standing of the remaining and/or incoming owners and may require updated mortgage documents or a deed of covenant.

Drafting the transfer deed (TR1)

The solicitor will prepare a TR1 form setting out the change in ownership. All parties sign the deed in the presence of an independent witness.

Registration at HM Land Registry

Once signed, the TR1 and supporting documents are submitted to HM Land Registry, which updates the official register to reflect the new ownership details.

Key legal and tax considerations of a transfer of equity

Stamp Duty Land Tax (SDLT)

Even if no money changes hands, SDLT may still apply.

This can occur where a mortgage exists — the share of any outstanding loan taken on by the new owner counts as “chargeable consideration.”

Example: If one party takes over 50% of a £200,000 mortgage, SDLT may be payable on £100,000.

Additional 3% SDLT may also apply if the incoming owner already owns another residential property.

Capital Gains Tax (CGT)

If the property is not your main residence, transferring a share could trigger CGT on any increase in value since it was purchased.

Inheritance Tax (IHT)

A gift of property (or a share of it) may have IHT implications if the person gifting it dies within 7 years. In such cases, the value of the gifted share may be counted toward the taxable estate.

Professional tax advice is highly recommended before proceeding with a transfer.

Leasehold properties and transfer of equity

If the property is leasehold, check the lease terms carefully. Many leases require the owner to obtain consent or notify the landlord or management company before changing ownership.

They may also require the new owner to enter into a deed of covenant, and a fee is often charged for this process.

Declaration of trust

Where there are multiple owners, it may be appropriate to create a declaration of trust setting out how the property is held — for example, whether ownership is 50/50 or in unequal shares.

Final thoughts

A transfer of equity can be a valuable tool for estate planning, relationship changes, or restructuring property ownership. However, every case is unique and can have specific tax, legal, and practical implications. Seeking early advice from your solicitor and tax adviser can help ensure the process runs smoothly and efficiently. Our expert team can help.