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Boost for First Time Buyer lending as last-gasp law change approved

The Building Societies Act 1986 (Amendment Bill) successfully passed its legislative stages as part of the last minute ‘wash up’ of legislation just after the General Election was called.
This new Act of Parliament was introduced by Labour MP Julie Elliott to help to put building societies on a level playing field with their banking competitors, enabling them to support more lending to first-time buyers and homeowners in the future.

Building societies account for a quarter of all new mortgage lending in the UK. They direct a greater proportion of lending to first-time buyers than banks. In the first nine months of 2023, over half (55%) of all building society lending for property purchases was to first time buyers - supporting over 70,300 households to buy their first home.

Modernising the current legislation is long overdue according to many analysts.


Under the existing Act, member owned building societies are required to raise at least 50% of their funding from members’ savings deposits. This ‘funding limit’ is an important feature of the building society model, as it preserves their mutual status. However, other types of funding, taken from the financial markets or from the Bank of England, also count toward the funding limit, and constrains building societies from competing more effectively with the UK banks.

Amending the current Act will enable building societies to have more capacity to lend to UK customers, and to access emergency funding from the Bank of England in a time of financial stress, without it impacting their funding limits. This will help to ensure building societies continue to operate safely and securely while also enabling them to help more people to get on the housing ladder.

Robin Fieth, Building Societies Association chief executive, says: “The fact that this Bill has been able to successfully complete the necessary Parliamentary stages as part of wash up is testament to the strong cross-party support for building societies and the important role they play in our communities.  Our thanks to Julie Elliott MP, who introduced this Bill, to Lord Kennedy of Southwark who took it through the Lords and to Economic Secretary to the Treasury Bim Afolami MP and his team at HM Treasury for all their support in ensuring it made it to the statute book.

“The new Act will help level the playing field for the UK’s building societies and give them the capacity to lend more into the economy. It’s high time the 1986 Act was updated to reflect the needs of today’s economy. The changes brought in by this new Act will drive greater competition in the mortgage market, which will give mortgage customers more choice, and support a healthy marketplace.”

Julie Elliott is not standing as a candidate in the July 4 election but has this week tweeted: “A huge day for Building Societies & First Time Buyers! Really proud that my Private Members Bill to level the playing field with banks & unlock billions of extra lending to FTBs has passed through the Lords … Building Societies were founded to help working people own their own home & are essential for our communities & FTBs where over 55% of their lending goes.”


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