A lender has closed a scheme designed to help first-time buyers due to unintended consequences of the Government’s hike to stamp duty.
Since April, individuals buying second homes or buy-to-let properties have been hit with a 3 percentage point surcharge in stamp duty.
Coventry Building Society has taken the decision to close its Step Up family mortgage to new business after it discovered parents and guardians would hit by the stamp duty hikes.
The Step Up mortgage was designed to bolster first-time buyers’ income with that of their parents or grandparents as part of Coventry’s income assessment.
The Step Up loan meant first-time buyers were responsible for repayments, but their parent or family member was added to the property title deed.
If the parent or family member already owned a property then signing the additional title deed on a second property worth more than £40,000 meant they were eligible to pay an extra 3 per cent stamp duty under Treasury rules.
A Coventry spokeswoman says: “The changes to stamp duty had an impact on the support we offered first-time buyers through our Step Up facility.
“It was withdrawn for new mortgage applications from 28th July, though existing arrangements are not be affected.”
The Coventry Building Society website says: “The Step Up facility is no longer available to new customers. However, existing Step-Up customers can still apply for porting, transfers of equity and further advances.”