The Building Societies Act 1986 (Amendment) Bill aims to modernise societies by expanding their lending capacity
Proposed reforms to building societies could provide a boost to thousands of first-time buyers hoping to get a foot on the property ladder.
These potential changes are supported by the House of Commons. The Building Societies Act 1986 (Amendment) Bill, which aims to modernise societies and increase their lending capacity, suggests these reforms.
Labour’s Julie Elliott put forward this planned legislation. It came after a government consultation looking into ways for building societies to compete on a more level playing field with banks” and stimulate competition in the financial services industry.
Ms Elliott’s bill that is backed by the Government has just got through its second reading in the Commons, progressing with no opposition. Now, MPs and members of the House of Lords will take a closer look at it.
While discussing the bill in the Commons, Sunderland Central MP, Ms Elliott said: “Although this Bill doesn’t solve all the issues in the broken housing market today, it could free up more availability of money to lend in mortgages. And as building societies lend more in percentage terms to first-time buyers, then it should enable more first-time buyers to get on the housing ladder.”
She added: “Modernisation of building society legislation is long overdue, there are some archaic requirements around the way they fund themselves that puts them at a competitive disadvantage when compared to banks. Competition in banking is good for consumers and given building societies drive innovation, particularly in supporting first-time buyers, strengthening the sector is a great route to supporting aspiration across the UK.”
She continued: “Prudent lending is crucial to the UK’s economic growth. Making this change will make building societies safe, more secure, and competitive in the long term, without affecting their status as mutuals.”
Conservative former minister George Freeman stated: “This is a really important Bill for updating the law, giving building societies a chance to get back to where they were in the early 90s they were responsible for something like 60% of the market, that’s dropped down to 20%. “Increasing lending capacity is in itself a huge step forward, I think the figure is £10 billion of extra lending capacity will allow the provision of another 20,000 mortgages, and particularly for first-time buyers that is hugely important.”
Labour’s shadow Treasury minister Tulip Siddiq commented: “Since 2020 building societies have supported 360,000 first-time buyers, that’s over £63 billion provided to help people buy their first homes, that’s why this Bill is so important. It will empower societies across the UK to raise more funds and help our vulnerable constituents.”
Treasury minister Nigel Huddleston confirmed that the Bill has the “whole-hearted” support of the Government. He further stated: “The Government sees this Private Member’s Bill as a great way to support building societies, ensuring that they can compete with retail banks on a more level playing field, while continuing to provide essential competition to the UK financial services sector.”
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