BSA urges government to modernise legislation holding back housing market
The Building Societies Association (BSA) warned that home ownership is set to become the central dividing line for financial security in Britain by 2050, with access to property increasingly determined by family wealth rather than hard work and saving.
The BSA warned the gap between those inside and outside the housing market is likely to widen over the coming decades, further deepening the generational divide.
According to its long-term strategy report, the BSA argued that strained housing affordability reflected a much broader shift in household finances. Unpredictable incomes, higher levels of debt, smaller savings buffers and less certain retirement incomes, made up the bigger picture of affordability challenges.
Burnham’s 10-year plan to consider building societies and credit unions.
BSA member chief executives signed an open letter to Prime Minister Andy Burnham, asking for support on the delivery of a forward-looking housing strategy.
The letter said that “action to modernise legislation and unlock the full potential of the mutual sector” and “better access to cost-effective capital to support more affordable and responsible lending to families, first-time buyers and businesses” could help unlock home ownership amongst wider economic priorities.
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The BSA welcomed changes to capital requirements in April, while continuing to push for an approach that encourages greater innovation across the sector.
Building societies must persevere with innovation
Mutuals were urged to continue innovating in housing finance, moving beyond traditional 25-year repayment structures to better reflect changing financial circumstances for borrowers.
It’s long-term strategy encouraged building societies to “innovate through longer intergenerational terms, better shared ownership, greater capacity to build and develop as well as buy a home, later life lending, transfers between generations and even direct participation in long-term rental housing”.
The report highlighted more than 360,000 first-time buyers (FTBs) have been supported by building societies over the past three years. FTBs accounted for 39% of owner-occupied lending in the past 12 months.
Sarah Harrison (pictured), CEO at the BSA said: “Home ownership has long been one of the foundations of financial security in Britain. But unless we act now, we risk creating a society where owning a home depends less on hard work and careful saving, and more on whether your family has the wealth to help you onto the property ladder.”
She added: “Building societies are already showing that there are different ways to help people achieve home ownership, including many who might otherwise think buying is out of reach, and are helping millions build stronger savings habits.
“As people’s lives continue to change, we need to ensure the sector has the freedom to keep innovating, developing new products and services that reflect how people live and work today, while remaining true to our purpose of improving members’ financial wellbeing.”
