Last reviewed: June 2026
TL;DR- Transfer of equity changes the legal ownership of a property by adding or removing owners, without a full sale and repurchase.
- If a mortgage is in place, the lender must consent to any change in ownership and borrower structure.
- Common uses include relationship changes (adding a partner, separating), gifts of equity to family members, and estate planning.
- Stamp duty, capital gains tax and inheritance tax implications must be considered for any transfer of equity transaction.
What Is a Transfer of Equity?
A transfer of equity is the legal process of changing the ownership of a property - adding or removing one or more owners - without a full sale. The existing registered title at HM Land Registry is amended to reflect the new ownership structure. If there is a mortgage, the lender's charge remains in place and the lender must consent to the change.
Transfer of equity transactions arise in many contexts: adding a partner to a property as the relationship progresses; removing a former partner after separation; gifting a share to a child or family member; restructuring ownership for tax planning purposes; and adding or removing a business partner's interest in jointly owned property.
The Lender's Consent Process
Where a mortgage is in place, the existing lender must be notified and must consent to the transfer. The lender assesses whether the proposed new ownership structure is acceptable - this includes an affordability assessment for any new borrowers being added and verification that the remaining borrowers can service the mortgage. The lender must formally agree before the solicitor can complete the transfer at Land Registry.
Some lenders charge a fee for processing consent to a transfer of equity. The process typically takes 4-8 weeks from application to completion, though complex cases take longer.
Tax Implications of Transfer of Equity
Transfers of equity can trigger multiple tax charges depending on the structure:
- Stamp duty land tax: SDLT may apply where consideration (money) passes, such as where the new owner takes on a share of the outstanding mortgage or pays cash for their share. The standard SDLT rates (or additional property surcharge, if applicable) apply on the consideration.
- Capital gains tax: where the transferor makes a gain on the transferred share (difference between its current value and their original cost), CGT may apply. Transfers between spouses or civil partners during marriage or civil partnership are exempt. Gifts to others at undervalue may be treated as if made at market value for CGT purposes.
- Inheritance tax: gifts of equity are potentially exempt transfers (PETs) for IHT purposes. If the donor dies within seven years of making the gift, IHT may apply on the gifted amount.
The interaction of these taxes requires specialist advice before any transfer of equity is completed.
Common Transfer of Equity Scenarios
Gifts of equity from parent to child: a parent transfers part of their property to a child, typically at an undervalue to assist with housing. SDLT applies on consideration (cash or mortgage assumed by child). CGT may apply on the parent's gain. IHT is relevant if the parent continues to live in the property after the gift (gift with reservation of benefit rules apply).
Separation and divorce: one partner buys out the other's share. SDLT applies on the consideration. Relief from SDLT may be available for transfers pursuant to a court order in divorce proceedings.
Frequently Asked Questions
How long does a transfer of equity take?
A straightforward transfer of equity typically takes 4-8 weeks from instruction of solicitors to registration at Land Registry. Complex cases (adverse title issues, difficult lender consent, disputes between parties) can take significantly longer. The lender's consent timeline is often the longest element - some lenders process consent quickly; others take several weeks.
Can I transfer equity between spouses without tax?
Transfers of assets (including property) between spouses or civil partners who are living together and not separated are generally exempt from capital gains tax under the no gain/no loss rule. The recipient spouse takes the property at the transferor's original base cost for future CGT purposes. SDLT exemption may also apply between spouses where the transfer is on the occasion of marriage or as part of a divorce - specialist tax advice should confirm the specific exemption applicable.
Does the mortgage need to be reapplied for during a transfer of equity?
Not always. Some lenders process consent to a transfer of equity as an administrative change without requiring a full remortgage application. Others treat it as a remortgage event, particularly if the borrower structure changes significantly. A full remortgage may be required if the existing lender declines consent or if the transaction requires capital raising that the existing lender cannot accommodate.
What is a gift with reservation of benefit for IHT?
A gift with reservation of benefit (GROB) occurs when a person gives away an asset (such as a share of property) but continues to benefit from it - for example, by continuing to live in the property rent-free. HMRC treats GROBs as if the gift was never made for IHT purposes: the gifted asset remains in the donor's estate at death. To avoid GROB treatment where a parent transfers a share to a child but continues to live in the property, the parent must pay a market rent to the child for their share. Specialist IHT advice is essential for any property gift where the donor will continue to use the property.
