You may wish to consider transferring the legal title of your property from your sole name into joint names. This process is also known as a Transfer of Equity. The process is straight forward and your chosen Conveyancing Lawyer will be able to assist you.
As part of the property transfer process you should consider how you wish to hold the beneficial ownership – either as Joint Tenants or Tenants in Common.
Your Conveyancing Lawyer can search the Land Registry and obtain a copy of the registered title. If the property isn’t registered your Conveyancing Lawyer will ask you for the whereabouts of the Title Deeds.
If your Conveyancing Lawyer is satisfied the title is in order they will then prepare a Transfer Deed to transfer the property from sole name to joint names. All parties will be required to sign the document which records the transfer of title. Your wishes relating to the beneficial interest will also be recorded in the Transfer Deed, while you may also wish to create a Declaration of Trust to record your specific intentions.
As part of the ownership transfer you should also consider the following:
- Do you currently have a mortgage on the property? If you do you will require consent from your mortgage company to transfer the ownership. Your mortgage company will require the new owner to enter into the mortgage. Your Conveyancing Lawyer will be required to comply with any lender requirements as part of the transfer.
- If you intend to re-mortgage your property you will be required to apply for your new mortgage in joint names. The re-mortgage and transfer will be completed together by your Conveyancing Lawyer.
- If your property is leasehold you may require consent from your freeholder and/or managing agent for the transfer. The new owner may also be required to execute a Deed of Covenant which will be an additional cost. Your Conveyancing Lawyer will advise you if this is necessary when they review the title to the property.
One of the costs that may be associated with a Transfer of Equity is whether you will be required to pay Stamp Duty Land Tax. Stamp Duty is a complicated area to understand when considering a transfer of ownership to joint names. You should speak to your Conveyancing Lawyer at the beginning of the transaction to ascertain if Stamp Duty is payable or not. Stamp Duty is payable on transfers when the consideration is over the current Stamp Duty threshold. Examples include:
- The owner of a property valued at £500,000 with an outstanding mortgage of £400,000 transfers half of the property from sole owner to joint owners when they marry. Their partner takes 50% of the mortgage (£200,000). Stamp Duty is paid on the amount of consideration which is £200,000 and above the current stamp duty threshold. On completion of the transfer £1,500 Stamp Duty will be payable.
- The house is valued at £350,000. The current owner of the property has equity of £200,000 and an outstanding mortgage of £150,000. The owner transfers a half share to their partner. The partner pays cash for half of the equity (£100,000) and takes on 50% of the outstanding mortgage, which is £75,000. The consideration of the transfer is £175,000 and therefore above the Stamp Duty Land Tax threshold which means Stamp Duty is payable.
For more information see Stamp Duty Land Tax.