Adding a partner to your property: transfer of equity explained

If you already own a property and want to add your spouse or partner as a joint owner, the change will usually be completed through a transfer of equity.

This can arise when a couple moves in together, gets married or enters into a civil partnership, or simply decides that a property previously owned by one person should now be owned jointly.

While no sale is taking place, adding someone to the ownership of a property is still a legal transaction. If there is a mortgage, the lender will usually need to approve the change, and there may also be tax and other financial considerations.

If you are considering adding your partner to the ownership of your property, contact our residential property solicitors for advice on the transfer of equity process and the steps involved.

What is a transfer of equity?

A transfer of equity changes the legal ownership of a property without it being sold to a third party.

Where a property is currently owned by one person, a transfer of equity can be used to add a spouse or partner as a joint owner.

For example, if one person bought a property before entering into a relationship and the couple subsequently decide that they would like to own the home together, the existing owner can transfer the property into their joint names.

The change in legal ownership must then be registered with HM Land Registry.

Can I just add my partner to the title deeds?

Adding a partner to a property involves more than simply adding their name to the title deeds.

The legal ownership of the property needs to be formally transferred from the existing owner to the existing owner and their partner jointly. The appropriate transfer documentation must be prepared and the change registered with HM Land Registry.

There are also other matters to consider before the transfer takes place, including any existing mortgage, how the beneficial interest in the property will be held between the parties and whether any tax liability may arise.

Taking legal advice before making the change can help ensure that the ownership arrangements reflect what both parties intend.

What happens if there is a mortgage?

If the property is mortgaged, the lender's consent will usually be required before a partner can be added to the ownership.

This is because the lender has an existing legal charge over the property and will need to agree to the proposed change in ownership.

The lender may carry out affordability and eligibility checks on the person being added and will usually require them to become jointly responsible for the mortgage.

Depending on the lender and the existing mortgage arrangements, the transfer may be dealt with by the current lender or may take place alongside a remortgage.

Homeowners should therefore speak to their mortgage lender at an early stage when considering adding a partner to their property.

How will we own the property together?

When a partner is added to a property, the new joint owners will need to consider how they wish to hold the beneficial interest in the property.

The two main options are joint tenants and tenants in common.

1. As joint tenants, both owners have equal rights to the whole property. If one owner dies, their interest automatically passes to the surviving owner and cannot be left to someone else under a will.

2. As tenants in common, each owner can have a defined share in the property. Those shares can be equal or unequal and, if one owner dies, their share does not automatically pass to the other owner and can instead pass under their will.

The most appropriate arrangement will depend on the circumstances of the owners and what they want to achieve.

What if we are contributing different amounts?

Adding a partner to a property does not necessarily mean that the parties need to have equal beneficial interests in it.

For example, one person may have purchased the property several years earlier and built up substantial equity before their partner is added. Alternatively, the partner being added may make a financial contribution towards the property when the transfer takes place.

Where the parties intend to have different beneficial interests, they may decide to own the property as tenants in common in specified shares.

A declaration of trust may also be appropriate to record how the beneficial interest in the property is held and clarify the parties' respective interests.

It is important to consider these arrangements before completing the transfer so that the legal documentation accurately reflects what has been agreed.

Is Stamp Duty Land Tax payable when adding a partner to a property?

Stamp Duty Land Tax (SDLT) can sometimes be payable when a partner is added to a property, even if the property is not being sold and no cash changes hands.

Whether SDLT applies will depend on the amount of any chargeable consideration given in exchange for the interest in the property.

Where there is an existing mortgage, taking responsibility for a share of that mortgage can amount to chargeable consideration for SDLT purposes.

For example, if a partner is added to the ownership and becomes responsible for part of an existing mortgage, that mortgage liability may be taken into account when determining whether SDLT is payable.

Other tax considerations, including potential Capital Gains Tax, may also arise in some circumstances, particularly where the property is not the owner's main residence.

The tax position will depend on the circumstances of the transaction, and homeowners should obtain appropriate tax advice where required.

Does getting married automatically give my partner ownership of my property?

Marriage or entering into a civil partnership does not itself add a spouse or civil partner to the registered legal ownership of a property.

If a property remains registered in one person's sole name, a transfer of equity will generally be required if the couple wants both names to appear on the legal title.

Couples may therefore decide to review their property ownership arrangements after marrying, entering into a civil partnership or making longer-term financial plans together.

What legal work is involved in adding a partner to a property?

A transfer of equity will typically involve:

• Reviewing the property's title documentation.
• Confirming the proposed ownership arrangements.
• Obtaining mortgage lender consent where required.
• Preparing the transfer documentation.
• Dealing with any lender requirements.
• Considering whether an SDLT return is required.
• Arranging for the legal documents to be signed.
• Registering the new ownership with HM Land Registry.

Where the parties will own the property as tenants in common, additional documentation may also be appropriate to record their respective beneficial interests.

Do we need separate solicitors?

Whether both parties can use the same solicitor will depend on the circumstances of the transfer.

Where both parties have the same objectives and there is no conflict between their interests, it may be possible for one firm to deal with the conveyancing aspects of the transaction, subject to professional requirements.

However, separate legal advice may be appropriate where the parties are contributing significantly different amounts, agreeing unequal beneficial interests or where their interests may otherwise differ.

Your solicitor can advise at the outset whether separate representation is required.

How long does it take to add a partner to a property?

The timescale for a transfer of equity will depend on the circumstances.

Where there is no mortgage and the ownership arrangements are straightforward, the legal work may be relatively simple.

Where lender approval or a remortgage is required, the process can take longer. The parties may also need additional time to agree how the property will be owned or to obtain advice on tax or a declaration of trust.

Once the transfer has completed, an application will be made to HM Land Registry to update the registered ownership.

Starting discussions with your lender and solicitor early can help identify any issues before they delay the transaction.

Guidance from our residential property solicitors

Adding a partner to your property can be an important financial decision, particularly where one person has already built up equity in the property or the parties will be making different contributions in the future.

Our residential property solicitors can guide you through the transfer of equity process, including dealing with your mortgage lender, preparing the transfer documentation and registering the change of ownership with HM Land Registry.

We can also advise on the different ways of owning property jointly and help ensure that the legal arrangements reflect what you and your partner have agreed.

Nicole Hoddinott, partner and solicitor, says:

“Adding a partner to the ownership of a property can feel like a straightforward administrative change, but it is important to think carefully about how the property will be owned and what each person's interest will be. Taking advice at the outset can help ensure the legal arrangements reflect what both parties intend, while also identifying any mortgage, tax or registration issues before the transfer takes place.”

If you are considering adding your spouse or partner to the ownership of your property, contact our residential property solicitors to discuss the transfer and the next steps.