Transfer of Equity:  When good intentions sometimes have unintended consequences

In recent months it has become a noticeable trend for members of the public to consider transferring the remaining equity in their property to another family member or in some instances, a friend by way of a Transfer of Equity.  This method of transferring property has many benefits for various reasons.  For parents, it is perhaps an easier way to help their children onto the property ladder and ensuring that the property stays within the family.  For children, an extra level of security in ensuring that the property doesn’t become lost to care fees.  Though well intentioned, a Transfer of Equity done incorrectly or without the proper legal advice sought ahead of doing so could have numerous pitfalls for all parties involved especially where no amount of money or consideration is deemed to have changed hands.   A recent story in a very well-known newspaper highlighted an ongoing case where one family member sought to transfer the ownership of their flat and the overall Freehold title to the building which they lived in into their child’s name with disastrous consequences.

There are a few cautionary points to consider:

1. It is crucial that any person seeking to transfer the equity in their property to anyone, family or friend alike, immediately seeks independent legal advice.
2. The persons being gifted the property should seek the immediate advice of a legal professional and tax advisor on whether there is an effect on their tax liabilities i.e. Stamp Duty for a first time buyer and capital gains tax respectively.
3. The assumed mantra of ‘keeping it in the family’ cannot just be relied on or replace the benefits of sound legal advice when making such a decision.

If you have any questions concerning the legal process of transferring the equity in your property, please call us today on 01606 74301 and let us put you at ease.