How do I transfer equity in a second or additional property?
A transfer of equity occurs when an existing owner of a property either adds or removes one or more people to the title (ownership) of the property. This can occur for a number of reasons, for example when a couple gets married or separates.
The process of transferring equity on a second home (e.g. a buy-to-let or holiday let) is essentially the same as the process for a primary residence - with a few key differences:
What is the process for transferring equity in a second home?
Transferring equity in a second property follows a similar process to transferring equity in a primary residence.
A conveyancing solicitor will draw up a 'Deed of Transfer’ for all parties to sign.
If there is a mortgage, the solicitor will represent the lender’s interests and ensure that the new owner meets the lender's lending criteria.
If a new mortgage is being taken out at the same time, the solicitor will usually complete the remortgage legal formalities in parallel.
Once all of the legal documents are completed and signed, the solicitor will register the new interest at HM Land Registry (HMLR).
Do I pay Stamp Duty Land Tax (SDLT) when transferring equity in a second home?
When transferring equity held in property or land, Stamp Duty Land Tax (SDLT) is payable on the 'chargeable consideration'.
When equity in a property or land is transferred from one person to another, chargeable consideration is the amount of debt transferred or taken on (the mortgage) plus the amount of cash being paid for the share of the equity.
SDLT on the second home equity transfer will also be subject to HMRC's higher rate for additional properties.
If the chargeable consideration exceeds the SDLT threshold of £125,000, you will have to pay an additional 3% in Stamp Duty.
How we can help you
Whether you are gifting a property to a child, getting married or separating, or transferring equity for any other reason, our solicitor panel can help make the process as straightforward and stress-free as possible.
If you are also planning to remortgage as part of the transfer process, the remortgage legal work can be completed at the same time as your transfer of equity.
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Helen Goddard, Legal researcher
About the author
Helen is an award-winning legal researcher and author. She is an experienced court litigation report proofreader and has written extensively on legal matters.