Building societies look to solve lending into retirement woes and call for action to tackle housing crisis

20th May 2015


The Building Societies Association says it is working to resolve the difficulties facing older borrowers and to improve mortgage options for new build homes, as it calls on the Government to develop a long-term strategy to tackle the housing crisis.

Opening the BSA Conference in Harrogate today , chief executive, Robin Fieth announced two BSA housing programmes: lending on new types of construction and lending into older age.

Solving the housing crisis in the UK will require action from multiple organisations and agencies.  The single most important thing that our new Government can do for housing in the early days of this Parliament is to set in motion a long-term plan based on national and regional demographics, infrastructure, employment and environmental concerns, the BSA says.

Housing charities and industry bodies are in agreement that 200,000 new homes are needed every  year in England alone.  But last year the total built by the private sector was less than 94,000, the BSA says.

The last time the UK built more than 200,000 new homes in a year was back in 1968. With the top five builders estimated to be able to satisfy only 30% of this demand, it is essential that many more developers,  as well as housing associations and local authorities are also empowered to build, the BSA argues.

Fieth says: “The single most important thing that our new Government could do for housing in the early days of this Parliament is to set in train a cross-party fifteen year plan based on national and regional demographic changes, employment, environmental concerns, infrastructure and house price inflation…

“…So to meet its manifesto commitments, the new Government must ensure that Local Authorities and Housing Associations build as well. And build in real volume. And, as importantly, replace homes sold through Right to Buy at a ratio of more than one to one.”

He says that many building societies already have a good working relationship with local and regional builders and are the main suppliers of mortgage finance for self and custom build across the UK.

The BSA is launching a programme designed to increase the availability of mortgage finance for homes built using modern construction methods and materials.  This applies particularly to off-site modular construction, a method currently niche that is substantially quicker than standard brick and tile construction.  It is not yet well understood by the lending community.

The Association also unveiled plans to help older people access mortgage borrowing. It highlights a recent report from NESTA, which found that life expectancy is increasing by  five hours every day.

Yet people who need to borrow close to or in retirement face difficulties, partly as a result of mortgage regulation.

The BSA says the building society sector already tends to adopt a more flexible approach to age than other lenders, but there is more to do. The BSA and its members are working now with Age UK and others to start to tackle this issue.

Fieth says:  “With a state pension currently promised at £140 a week and an average defined contribution pension pot reckoned to be about £26,000 giving a tax free lump sum of £6,500 and an approximate monthly pension of £50-65, we should expect those who are fortunate enough to own their own homes to want to use those properties to help finance their retirement and, ultimately, care whilst they continue to live in them.

“This will present a real challenge, but it is not one that I believe we can duck – and I include our Regulators in that challenge.Financing older age will, I believe, be one of the critical social issues for the remainder of the 21st century.

“Which is why we have started a major project involving over 20 societies in exploring the opportunities for the sector, together with the challenges and the obstacles facing those people that need to borrow close to, or in, retirement.”

1 thought on “Building societies look to solve lending into retirement woes and call for action to tackle housing crisis”

  1. Jive Bunny says:

    Or they could try a holistic approach through overturning the upside down Victorian values whereby the more children you have the more money the State pays you and try means testing all Child related benefits and only making benefit payments for the first child allied to an immigration policy allowing only immigrants and their immediate family possessing the skills the UK wants and of the correct age to try to start reducing the UK population and hey presto! the housing shortage will resolve gradually over about 30 years.

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