Building societies should be there to help people realise the dream of home ownership
The building society sector is exploring solutions for the severe shortages of homes, says Robin Fieth, Chief Executive of the Building Societies Association.
Too often in financial services, everything looks like it just hinges on the numbers. Real lives and dreams are subsumed in balance sheets and profit and loss accounts.
Last week I was struck by a comment made by a national journalist who wrote “Results statements and press releases are awash with figures, what they cry out for is context.” He was talking about better context to explain the numbers, but it made me think about the stories of the people who we serve and the effect that we have on them. It reminded me why we fight for policy change and work to stimulate debate in our areas of expertise on solutions around the housing crisis and our ageing population.
At their heart, building societies are there to help people save, and use these savings to help realise the dream of home ownership - it is quite straightforward. The fundamental difference between a PLC and a building society is customer-ownership. Without shareholders and dividends the discussion about profit changes – it is about making enough profit rather than maximising it.
About a third of the UK population, 21 million people, rely on a building society. One in every three new mortgages is from one of the 44 different societies on high streets up and down the UK. A third of those are made to young and today not so young people buying their first home. With society ageing and working patterns changing, people who are self-employed, older or want to build their own home are most likely to get a mortgage from a building society.
Working together and with others, our sector is exploring potential solutions for the severe shortage of homes across the country. Building an understanding of modern methods of housebuilding, like offsite construction is one way of growing supply. It can be faster, cheaper, overcomes the vagaries of the weather and some of the skills shortages prevalent in traditional building. Our neighbours in Europe, the US and Japan have built offsite for decades. If builders are to build more homes this way, the supply of mortgages must also increase. Legal & General has now started production in its factory near York, which you can see on YouTube. We are championing offsite and were pleased to see some of our suggestions reflected in the Housing White Paper pre-election. It is now about the ‘what next’.
At the same time we have an ageing population struggling to buy a home, whether for the first time or because of a life-event like divorce – a growing reality for the over 50s. The BSA chairs a cross-industry group of regulators, lenders, age charities and others to establish what lenders can do to help facilitate lending to older borrowers. Already 34 building societies lend to those aged 80 or over at the end of their mortgage term.
Lending age limits also affect younger people. Affordability and saving for a deposit are consistent barriers to home ownership, meaning many first time buyers are getting onto the property ladder in their 30s not their 20s, often with a 35-40 year term to make the mortgage affordable. Last year 38% of new mortgages had a term that finished after the borrower’s 65th birthday. More needs to be done yet to adapt lending criteria to the changing needs of society.
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