Coventry Building Society has closed its Step Up family mortgage to new business due to parents and guardians being hit by stamp duty hikes aimed at landlords.
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 least an extra 3 per cent of 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“It was withdrawn for new mortgage applications from 28th July, though existing arrangements are not be affected.”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.”
Yes the SDLT rules have had some unintended consequences for such borrowers although I would like to think it could have perhaps been a solution for Coventry to follow suit with Woolwich and Metro with the joint applicant/ sole proprietor solutions that could still allow parents to support children on their purchases as the scheme originally intended.