I figured it out guys, thank me later 😛 see screenshot below.
There was a bit of tooing and frowing, but I think this is what got it to work.
After you accept the invite in incognito mode, go back to the account you want to change ownership FROM and change the 'Administration' permissions to 'off' for the account you want to transfer squarespace to.. I think from this, the new account you want to take over as ownership, will finally be there to click in the drop down.