What’s the Impact of Title Deeds on Equity Release?
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- Understanding property title deeds is crucial for equity release, as they record property ownership and history.
- For a lifetime mortgage, the lender's charge is registered on the title deed, while the owner retains full ownership.
- Home reversion plans involve updating the title deed to reflect shared ownership with the provider.
- Equity release requires clear, unencumbered title deeds, often necessitating settlement of existing charges or debts.
- Title deeds differ across UK regions, with specific registration procedures and implications for equity release.
Securing an equity release plan involves a fair bit of admin, and you may be wondering what you should know about property title deeds and equity release.
But what if you don’t know where your title deeds are, whether your name’s on them, whether your property’s registered with the Land Registry, "am I eligible for equity release?, or even "is equity release a con", as this requires careful evaluation of its implications.
In This Article, You Will Discover:
The team at Every Investor has put together this comprehensive guide to help you understand how all this works.
Let’s examine how property title deeds and equity release work together.
What Is Equity Release?
Equity release offers a financial solution for individuals over 55 to access the capital tied up in their homes.
It's a viable option for those looking to enhance their financial situation in retirement or to meet specific financial objectives.
The market predominantly features two types of equity release on a house: lifetime mortgages and home reversion plans.
In a lifetime mortgage, you take a loan against your home's value, repayable from your estate later.
Home reversion involves selling a share of your property in return for a lump sum or a series of payments, whilst maintaining residency.
What’s a Property Title Deed?
A property title deed1 is the document that shows the chain of owners, past and present, of a property.
The title deed includes the following:
- Contracts of sale
What Happens to My Title Deeds When I Take Out an Equity Release Plan?
When you take out an equity release plan, there may be changes to your title deeds, which are the legal documents proving your property ownership.
What Happens to My Title Deeds if I Take Out a Lifetime Mortgage?
If you take out a lifetime mortgage, you retain full ownership of your property.
However, the equity release provider will register a first legal charge on your title deeds at the Land Registry.
This means the provider has a legal claim over the property, which will be settled when the plan ends (typically when you pass away or move into long-term care).
The title deeds will still show you as the owner, but the equity release provider will have a legal interest in the property.
What Happens to My Title Deeds if I Take Out a Home Reversion Plan?
If you take out a home reversion plan, you sell a portion or all of your property to an equity release provider in exchange for a tax-free cash lump sum, a regular income, or both.
In this case, the title deeds will be updated to reflect the shared ownership between you and the provider.
The exact changes to the title deeds will depend on the terms of the agreement and the proportion of the property sold.
- With a lifetime mortgage2 , you retain ownership of the property, but the mortgage will be added to your title deed.
- With a home reversion3, you effectively sell all or part of your home to the lender, so the lender will be listed as the owner or part-owner of the property on your title deeds.
Don’t forget to seek advice!
In both cases, it's essential to seek professional advice from a qualified equity release advisor who can guide you through the process and help you understand the implications of changing your title deeds.
An advisor can also help you explore alternative options if equity release isn’t suitable for your situation.
Should your property be held in a trust4, the trust would have to be unwound before completing an equity release deal because a property must be free of encumbrances to qualify for equity release.
The nature of a trust means that the property's equity passes to the beneficiaries.
However, an equity release agreement requires that the lender has the first legal charge (first claim) to the property, which contradicts the principles of a trust.
In the case of equity release, ‘charges’ refers to any debt registered on your property, such as mortgages, secured loans, or existing equity release plans.
County Court Judgements5 or any other debt will also be registered against the property.
These will all need to be settled as part of the equity release agreement because your lender requires that it be the only charge on your title deeds.
Covenants & Restrictions
Covenants and restrictions are also listed on your title deeds and refer to any agreements related to your property and another landowner.
For example, a restrictive covenant may cover aspects such as what you can use the property for.
A positive covenant is an obligation, such as maintaining fences and driveways.
These are standard, and you should’ve been made aware of them when you bought the property.
Equity Release Title Deeds in Other Countries in the UK
Other countries in the UK have different arrangements when it comes to title deeds registries.
The Scottish Land Registry6 oversees land transactions, and pretty much the same rules apply to title deeds and equity release agreements as they do in England.
Northern Ireland has its own land registry7, which falls under the auspices of Land and Property Services.
The title deeds will also list the previous owners, charges (including equity release plans), and covenants.
Besides those registered in England, HM Land Registry8 also manages Welsh property transactions.
Welsh title deeds would contain the same information as title deeds in the rest of the UK.
How to Find Out if My Property’s Registered With HM Land Registry
To find out if your property’s registered with HM Land Registry, you can visit the website, where you’ll enter your property name/number and your postcode, and the results page will show if your property is registered.
It became compulsory to register all property transactions from 19909, and any mortgages or equity release plans attached to a property from 1998.
How Do I Obtain a Copy of My Property’s Title Deeds?
You can obtain a copy of your property deeds from the land registry office.
First, you’ll have to find out whether your property’s registered with the land registry office, especially if you bought it prior to 1990 and haven’t made any amendments or taken out any loans against the property since then.
If your property’s registered, you can download copies of your property summary, title plan, and title register.
The property summary includes the following:
- The property’s address (the one held by the Royal Mail)
- The property description
- The tenure type (the type of ownership on the property)
- Any restrictive covenants (restrictions on how you may use the land)
- Any easements (the rights of one piece of land over another, like a right of way)
There’s no charge for a copy of the property summary.
However, if you need details of any restrictive covenants or easements, you’ll need to buy the title register.
You’ll also need to order an official copy of the property summary if you need to prove ownership of the property, such as in court.
The title register includes the following:
- The title number
- The property owner
- The last purchase price for the property
- Whether the property has a mortgage
- Details of any restrictive covenants
- Details of any easements
Your title register may not include details of the restrictive covenants or easements but will point you to which documents do.
A copy of your title register will cost £3.
The title plan includes the following:
- The property’s location
- General boundaries
A copy of your title plan will cost £3.
However, some title plans can’t be downloaded, and will have to be mailed to you at a cost of £7 per document.10
How Do I Find Out Who’s on My Land Title With Equity Release?
You can find out who’s on your land title with equity release via the HM Land Registry office.
They can provide details of anyone else who’s got shares in your property.
You may need this information as equity release only allows for 2 co-owners of a property.
If more than 2 people are listed as property owners, their names will have to be removed from the title deed before the equity release application can proceed.
How Can I Register an Unregistered Property?
You can register an unregistered property through the HM Land Registry office.
A property must be registered when you take ownership or take out a mortgage on it.
It’s also advisable to register your property voluntarily if it’s not yet on the land register.
Voluntary registration provides the following benefits:
- It provides proof of ownership.
- It protects your land against fraud (such as it being sold or mortgaged illegally by a third party).
- It makes it easier to sell or mortgage your property in the future.
The steps you’ll need to take to register your property are:
- Search the register to make sure it’s not already registered.
- If it's not registered, apply to the Land Charges Register11, which will send you any charges on your property all the way back to 1925.
- Complete a first-time registration form.
- Provide a scale plan of your property if there isn’t one in the deeds.
- Find out what other documentation12 you need (depending on whether you’ve bought or inherited the property) and submit 2 copies of the documents.
- The fee for the registration will depend on the value of your property.
- Send your documents, forms, and fees to HM Land Registry.
Does Equity Release Show on the Land Registry?
Can 2 People Hold Shares on Land Registry Title Deeds at the Same Time?
Can I Take Equity Release if I’m Not on the Property Title Deeds?
Do I Need Permission From Everyone on the Title Deed to Take Out Equity Release?
What’s Transfer of Equity of Properties?
Why Would I Choose a Transfer of Equity of Properties With Equity Release?
What Are the Tax and Stamp Duty Implications When Transferring Property Equity?
Understanding the relationship between property title deeds and equity release is crucial for UK homeowners considering this financial option.
Equity release plans can have different implications for your title deeds: While lifetime mortgages allow you to retain full ownership of your property, home reversion plans involve selling a portion or all of your property to the equity release provider.
As such, it’s vital for homeowners to consult with a qualified equity release advisor who can provide expert guidance and help navigate the complexities of property title deeds and equity release.
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