The Intermediary – March 2026 - Flipbook - Page 22
RESIDENTIAL
Opinion
Understanding
transfers of equity
A
transfer of equity
occurs when an
existing owner of
a property adds or
removes one or more
people from the title,
without selling or giing the entire
property. In other words, it involves
transferring a share or interest in the
property from one party to another
while at least one original owner
remains on the title.
This type of transaction can arise
in a wide range of situations, from
routine personal arrangements
to more complex financial or
legal restructuring.
Because each case carries different
legal, tax, and practical implications,
it is important to seek specialist advice
before proceeding.
There are several reasons why a
client may wish to carry out a transfer
of equity, and the motivations oen
vary depending on personal, financial,
or legal considerations.
For example, where parties enter
into a marriage, civil partnership, or
cohabitation, they may wish to bring
a property into joint names, which
provides both parties with a clear legal
interest in the home and reflects the
shared responsibility for mortgage
payments, maintenance, and other
household commitments; bringing
a partner onto the legal title can also
support future financial planning and
may help avoid disputes later.
In contrast, where there is a divorce
or relationship breakdown, it is
oen necessary to separate financial
interests, and a transfer of equity
may be required so that one party
becomes the sole owner of a jointly
owned property.
This frequently involves one party
buying out the other’s share, making
an accurate valuation essential, and
where the transfer forms part of a
financial selement, it should usually
be documented in a sealed Court
Order to ensure certainty and avoid
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The Intermediary | March 2026
unintended tax liabilities.
Transfers of equity are also
sometimes used as part of broader
tax and inheritance planning, where
an accountant or tax adviser may
recommend restructuring ownership
to help reduce Inheritance Tax
exposure, to equalise rental income
between spouses or partners, or to
align ownership with future giing
or succession plans. However, tax
rules are complex, and the timing
and structure of any transfer must
be carefully considered to avoid
unexpected costs.
In some cases, a transfer of equity
is needed because one owner wishes
to be released from the mortgage or
because a new party wishes to join the
loan. Tjis oen arises where parents
have provided financial support or
where one owner no longer wishes
to be financially responsible for the
property.
The process
The process involved in a transfer of
equity depends on the circumstances,
the nature of the property, and
whether there is a mortgage in place.
While every case is different, the
following principles typically apply.
Depending on the level of potential
conflict, one conveyancer may be
able to act for all parties. However,
where interests differ—such as in
divorce-related transfers or where
money is changing hands—separate
representation is usually required.
We will discuss the most appropriate
approach at the outset to ensure
transparency and compliance with
professional requirements.
If the property is mortgaged, the
lender must consent to the transfer,
and may need to assess the incoming
owner’s financial position or
undertake affordability checks. They
may also require the outgoing owner
to be formally released from the
mortgage obligations. Some lenders
insist on issuing a new mortgage offer,
VICTORIA POLLINGTON
is legal director and team leader
(Norwich) at Birketts LLP
whereas others are satisfied with
a simple deed of consent, so
securing lender approval early helps
avoid delays.
Where a transfer forms part of
divorce or dissolution proceedings,
a sealed Court Order is strongly
recommended, as without it Stamp
Duty Land Tax (SDLT) may become
payable. A Court Order also provides
legal clarity and helps ensure that
the arrangements form part of a
binding selement.
Leasehold properties oen require
the consent of the freeholder or
management company before
ownership can change. Some titles
also contain restrictions requiring
third-party approval. Obtaining
these consents can add time to the
process and should be addressed at an
early stage.
Where the transfer involves a gi
or transfer at less than market value,
Insolvency Act indemnity insurance
may be recommended. This protects
future purchasers and lenders if the
transfer is later challenged on the basis
that the outgoing owner aempted to
avoid creditors.
However, it is important to
understand that this insurance does
not protect the parties to the transfer
itself, and if the client is receiving
a gied share and the transferring
owner becomes bankrupt at a later
date, the interest in the property may
still be at risk.
However, it is important to
understand that this insurance does
not protect the parties to the transfer
itself. If the client is receiving a gied
share and the transferring owner
becomes bankrupt at a later date,
interest in the property may still be
at risk. ●
