How to gift your property to your children: A guide to updating your Title Deeds
Once you’ve decided you want to gift your property to your adult children or other adult family members, having had advice from an accountant or a financial advisor and a solicitor specialising in estate planning, the process of actually doing so is relatively straightforward in England and Wales.
You can have four legal owners of property in England and Wales i.e. four people named on the deeds, although you may have multiple beneficial owners of the equity in a property.
Provided your child is over 18 you can legally transfer the entire property or a share in the property to them.
Instructing a Solicitor
You would need to contact an experienced property solicitor who has experience in gifting property and transfers of equity.
The title to your property would be checked to understand the current legal ownership structure.
If your property is registered, then a solicitor would do this by obtaining an up to date copy of your title from the land registry. Most firms have business access to the land registry’s records so this can be downloaded very easily, usually within 24-48 hours, and the land registry produce title documents at approximately £7 per document. So, if you have just a single title number it is inexpensive to at least see who is on the title to a property.
If your property is unregistered then a solicitor will need to inspect the hard copy original deeds. You would need to deliver them safely to a solicitor’s office for them to review.
Additional requirements for leasehold property
If your property is leasehold then a solicitor will also need to check the terms of the lease to understand if there are any additional requirements to comply with. For example some freeholders will require an incoming owner enters into a licence or a deed of covenant agreeing to comply with the terms of the lease. This could mean additional legal costs which your solicitor will establish.
A solicitor will need to verify the identities of all of the parties to the transfer. The parties to the transfer do not have to have legal representation but they will be advised to seek independent legal advice. In some circumstances your solicitor may insist they are separately represented.
Verification of identity can be carried out electronically by most law firms and this is a question you should ask of your solicitor particularly if any parties reside overseas.
Once the title has been checked by the solicitor they will be able to draft the Transfer Deed to ensure the property goes into the correct name or names as per your instructions.
When a Declaration of Trust is needed
If you are retaining any interest in your property or if the property will be owned by more than one person after it is transferred perhaps you are transferring it to two of your children to own it together, then a solicitor will advise that a Declaration of Trust is put in place to record the shares in the property.
A solicitor will then be able to prepare a Declaration of Trust that should go into place between the parties and this is treated as a separate piece of work. It should be prepared in conjunction with the financial and legal advice you should have received before deciding you want to transfer the property in the first place.
Signing and completing the transfer
Once the Transfer Deed is prepared it will be signed by the parties and returned to the solicitor. If the parties are overseas some solicitors will be able to arrange for the deed to be executed electronically. Most solicitors are able to do this and it is a question you should ask when choosing a solicitor if this will be a requirement.
Alternatively, it can be printed, signed and the wet ink signed document will need to be returned to the solicitor.
It can be completed swiftly by the dating of the duly signed document by the solicitor.
Once the transfer has been completed the solicitor will register the transfer at the land registry and update the title to show who the new owners of the property are.
Will I pay Stamp Duty Land Tax?
Generally, a gift of property where there is no mortgage and no consideration to another individual will not attract Stamp Duty Land Tax (SDLT). However, you should consult a solicitor on your specific plans for advice as to any SDLT liability.
If the property is subject to a mortgage then the mortgage would need to be redeemed or the new owners would need to be added to the mortgage before the transfer could be completed. This would involve a mortgage application and the proposed new owners would need to speak to the mortgage lender or a broker. Stamp Duty Land Tax (SDLT) could be payable if there is a mortgage on the property.
If there is any money changing hands then the process is more complex as the other parties will need their own legal representation and SDLT may be payable. So the above guide refers to gifts of property to adults only.
How much does it cost?
The land registry do charge a land registration fee which will depend on the value of the property and whether or not it is registered or unregistered.
A property solicitor will charge a fee for the transfer based on the complexity and value of the property.
How long does it take?
If your property is registered with a single title then the process can take as little as 2-3 weeks to complete provided you instruct an experienced solicitor.
The land registration process can take up to 6 months due to HM Land Registry’s turnaround times. It is only once the title is updated that the new owners can deal with the property i.e. sell it or mortgage it.
However the ownership will be deemed to have changed from the actual date of completion.
If a Declaration of Trust is required because there will be joint owners who need to record their shares in the property then it can take longer for this to be prepared. The parties would be advised to ensure this is in place from the point at which the transfer is completed.
Please note the above guide is strictly on the basis you will have already received financial, legal and tax advice regarding the implications of transferring your property.
Further advice and support
Please contact the Private wealth team if you want to discuss gifting or transferring a share of your property to your children. We would be delighted to advise you further and clarify what may be required in your circumstances.
For more information contact Matthew Briggs, Boyes Turner – a Citywealth member
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