Completing TR1 - Transfer of Equity

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    Completing TR1 - Transfer of Equity

    Hello Landlord community,




    I know the topic I’m about to ask for your advice on has been covered in various forms but I can’t find the direct answer to my question so far, forgive me if it has.




    I’m looking to complete a TR1 form to hold a buy to let property that I currently own myself, to be tenants in common with my wife on a 10%wife/90%me split. The form seems straight forward enough except section 10: Declaration of Trust. Is it enough to simply write that the wife will hold a 10% share and I will hold a 90% share? Seems straight forward enough, but what have others done and is this satisfactory? The form seems ambiguous. After this I will then be going on to assign the wife 99% of the rent to use up her tax band allowance.




    I know many others may have done this using a solicitor but I have been quoted over £500 for this form to be completed and while I appreciate solicitors can be worth their weight in gold, I’m not inclined to pay someone to do something I could do myself, if it really is as straight forward as I have laid out here.




    I would appreciate any advice here and am more than happy to seek a solicitors advice if that’s the best course of action.




    Thanks all




    Alex

    #2
    You could contact the Land Registry and make an appointment to see an officer, to ask your question

    Comment


      #3
      I would use a solicitor because the consequences of getting this wrong make £500 look like a bargain.

      Does the property have a mortgage?
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Land Registry have arranged the process to keep jobs for the boys. If you are not a registered conveyancer you have to go through massive hoops to prove your identity, and will probably have to visit in person (which carries other costs).

        That said £500 is a total rip off. The work is not worth much more than £200 at £100/hour for a menial lawyer.

        Jobs for the boys all round.

        Comment


          #5
          You do not actually need to involve the Land Registry at all. When it comes to ownership of land there is legal ownership (in the case of registered land the legal owner(s) is/are the registered proprietor(s)*) and equitable or beneficial ownership (which is concerned with those who derive or will derive some benefit from the property). You can deal with the latter without dealing with the former. All that is needed, assuming the purpose of the exercise is simply to transfer the10% interest and no need is perceived for your wife to be on the legal title, is an assignment of the beneficial interest. Something like this:

          An Assignment dated 2019

          1. Parties

          1.1 The Assignor: John Smith of 3 Willow Walk Newton
          1.2 The Assignee: Mary Smith of the same address

          2. Definitions

          “the Property” means 17 Letting Street Newton
          “the Equitable Interest” means the Assignor’s equitable interest and all other his estate right and interest in the Property other than in the legal estate
          “the Assigned Interest” means ten percent of the Equitable Interest

          3. Assignment

          The Assignor by way of gift assigns to the Assignee the Assigned Interest

          4. Covenant

          The Assignor covenants with the Assignee that he will on written request by the Assignee execute and deliver to the Assignee a transfer of the legal estate in the Property to himself and the Assignee in which it is declared that the Property is held by the Assignor and the Assignee as tenants-in-common as to ninety percent for the Assignor and as to ten percent for the Assignee

          5. Deed

          This instrument is a deed

          Signed by John Smith in the presence of: ……………………………..


          Witness signature……………………...
          Witness name………………………….
          Witness address………………………..
          ………………………………………...
          ………………………………………...
          Witness Occupation…………………...

          ************

          The above assumes that the matter is straightforward. Any DIY conveyancing involves a risk and one of the traps the DIYer can fall into is to assume that his case is straightforward. The snag is that the only way to establish if the matter is straightforward is to consult a competent conveyancer - which of course is exactly what he wants to avoid doing. So the choice is whether to go for DIY and hope you get it right or pay a professional who will be backed by indemnity insurance if he gets it wrong.


          *There are exceptions not relevant to this thread.

          Comment


            #6
            Originally posted by AndrewDod View Post
            Land Registry have arranged the process to keep jobs for the boys. If you are not a registered conveyancer you have to go through massive hoops to prove your identity, and will probably have to visit in person (which carries other costs).
            The process has been introduced to reduce fraud and for no other reason. Compared to many other jurisdictions, the approach to the execution of legal documents is scandalously lax.

            Originally posted by AndrewDod View Post
            That said £500 is a total rip off. The work is not worth much more than £200 at £100/hour for a menial lawyer.
            Expensive maybe, but not a total rip off when compared to £5000 for collecting £500 rent or £900 for a licence to assign.

            Comment


              #7
              Lawcruncher responding to both your posts - thank you for them.

              On the assignment of beneficial interest versus legal title - one thing that has always worried me is that (despite the fact that beneficial ownership IS ownership, whether parties like HMRC are consistent enough to take that at face value.

              For example, I have one property where I am one of two parties on the legal title, but the entire beneficial ownership of my share is assigned to a third party via a bare trust (and that party lives in the property). It has always concerned me that when it comes to the crunch there may be a problem -- for example when the property is sold it should count as a sale by the owner's home with respect to ongoing 3% SDLT penalties - but is that secure and certain? If Jeremy Corbyn decides to levy a 10% windfall tax on second homes, will this count as a second home. And so on. There should be some mechanism for registering trusts with HMLR and or HMRC - at the moment you can only do this indirectly (via CGT declarations on Self Assessment, or via spousal declarations if that is the situation).

              On your other post - I'm not bashing lawyers in general, but I think there is a serious problem with leadership and control of the profession, which is particularly acute in this country. The fact of the matter is that altering names on a title in this sort of scenario is a pretty quick and easy job, and does not require a top 1% elite lawyer. Lawyers routinely (meaning commonly) lie about how long things take. Most people also do not accept that the hourly rate for such a person should be astronomical (say 20 times the average rate of population salary, or say 5 times the rate of a consultant surgeon). The difficulty we have is that it is not a free market determining price -- there are many many unemployed lawyers who would be delighted to do this sort of work for £100, but the profession is somehow controlled to keep those folk unemployed, whilst a minority control things at high price. It is not the same in other countries (or at least to the same extent) where there is a class of low-level family lawyers who will do decent high-quality work or provide advice at affordable prices. The consequence is that people do not use lawyers at all for doing simple daily things like drawing up wills, because it is simply un-affordable. That is not how it should be.

              I have a lawyer who does do work at plausible prices and is honest about how long jobs actually take -- but such people are hard for most members of the public to locate.

              Comment


                #8
                Since 1925 the conveyancing system has been designed to simplify conveyancing and one of the things it does is to keep beneficial interests "behind the curtain" so that purchasers are not concerned with them. The system of registered land expressly excludes noting beneficial interests, though they can be protected. I should not worry too much about getting taxed as a trustee - solicitors up and down the land do not worry about it.

                I agree with some of your observations on lawyers.

                Comment

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