Bank of mum and dad dealt tax blow

TAX hikes aimed at landlords are stopping parents from helping their children get on the property ladder.

Coventry Building Society has scrapped a mortgage deal for families over fears that they’ll be hit by the 3 pc second home tax.

The mortgage deal had allowed young borrowers to add a parent or close family member’s income to their application. That meant the child could get a bigger loan.

Now it’s emerged that Coventry stopped offering the ‘Step Up’ deal at the end of July.

The building society says the loan could have exposed parents who own their own home to higher stamp duty rates that were intended to hit landlords.

To take into account a family member’s income, Coventry required that the person be put on the title deeds alongside the main borrowers.

Technically, that meant they would be owners of two homes — and, therefore, face extra costs. Since April 1, anyone buying a second home has been forced to pay an extra 3 pc stamp duty. It takes the total tax bill on a £200,000 house to £7,500.

By comparison, a first-time buyer or homemover would pay just £1,500 stamp duty if they were going to live in the property.

A Coventry spokesman says: ‘The changes to stamp duty have had an impact on the support we offered first-time buyers through our Step Up facility.

‘We are looking at other ways that we can help families.’