Thanks. I've now gone and (hopefully) found the relevant bit of legislation related to debt as consideration.
http://www.legislation.gov.uk/ukpga/200 ... tion-301-3
The problem is that I don't know if it agrees with you or says that you always trigger SDLT consideration:
(3)In paragraph 8 (debt as consideration), after sub-paragraph (1) insert—
(a)debt is secured on the subject-matter of a land transaction immediately before and immediately after the transaction, and
(b)the rights or liabilities in relation to that debt of any party to the transaction are changed as a result of or in connection with the transaction,
then for the purposes of this paragraph there is an assumption of that debt by the purchaser, and that assumption of debt constitutes chargeable consideration for the transaction.
(1B)Where in a case in which sub-paragraph (1)(b) applies—
(a)the debt assumed is or includes debt secured on the property forming the subject-matter of the transaction, and
(b)immediately before the transaction there were two or more persons each holding an undivided share of that property, or there are two or more such persons immediately afterwards,
the amount of secured debt assumed shall be determined as if the amount of that debt owed by each of those persons at a given time were the proportion of it corresponding to his undivided share of the property at that time.
I'm not sure if 1B says:
in the case that (1)(b) applies then the amount of debt is a proportion of the total debt (So where the same person retains 100% liability there is no consideration)
(1)(b) applies where there's a change in the proportions of ownership and, therefore, the proportions of debt as assessed for SDLT.
It works when legal title is held in joint names, transferring a share of the property transfers a share of the mortgage debt (not withstanding any agreement otherwise) but isn't clear when the property (and mortgage) is in a single name.
As one example of where it doesn't seem fair:
Two people, (A) cash rich but income poor and (B) income rich but capital poor decide to pool their resources to buy a rental property 50/50
Property is bought in B's name only. B has mortgage and A puts in 50% of purchase price. Via declaration of trust A is entitled to 50% of the capital value of the property should it be sold and B must discharge the mortgage from his share and B is solely responsible for paying the mortgage. B will have a debt to A should his share not be sufficient to pay off the mortgage in the event that the property is sold. A is entitled to 50% of the rental receipts before any deductions for mortgage interest.
A later gives his share to C. Is there any SDLT due? I would say no, A was never liable for the mortgage and (1)(b) would seem to suggest that the liabilities didn't change. (1B) if it applies would say that SDLT is due.
Property is bought in joint names as tenants in common. As above, similar DoT. A gives his share to C. It would appear from the above legislation that irrespective of the DoT, C is assuming an additional mortgage liability and so will have to pay SDLT.
Indeed, A giving his share to B would also appear to trigger SDLT.
In the joint names case I think C does acquire a liability and A loses one. Should the property in its entirety be insufficient to discharge the mortgage then the mortgage company will be able to pursue C. The probability of that event happening might be tiny but it's not zero.