Advertisement
Housing

Major building society says it will stop offering mortgages on second homes

Leeds Building Society says it will no longer lend on second homes because they “reduce the number of properties available to live in”.

A mortgage lender has vowed to stop lending money on second homes after warning they are damaging housing supply and leading to sky-high prices.

Leeds Building Society (LBS) has announced it will not offer new lending on additional residential properties which are not let out, and will instead focus on first-time buyers.

The move is the latest in a series of actions taken against second homes and holiday lets as the UK experiences record rents and house prices with a shortage of affordable homes in the face of high demand.

Richard Fearon, LBS chief executive, said the building society must take a responsible approach to lending and members’ financial resilience in the face of inflation.

“Having reaffirmed our purpose and looked at how we deliver on this, we’ve taken the decision to withdraw from lending on second homes,” said Fearon.

“Second homes reduce the number of properties available to live in and we want to direct more of our efforts to other sectors, especially first-time buyers.

Advertisement
Advertisement

“Serving our members and supporting their communities remains at the heart of our business, as demonstrated daily by the commitment, drive and expertise of our fantastic people throughout what has been another extremely demanding period.”

Chris Bailey, national campaign manager for Action on Empty Homes, welcomed LBS’ move.

“If housing isn’t in residential use, it’s a travesty to refer to it as a ‘home’ at all. Second homes and short-lets, or whole-home Airbnbs, don’t house anyone at all, so they are no longer homes,” said Bailey.

“It is time to give priority in building and lending to those in need of homes to live in, not to those with the deepest pockets, who see housing as just another investment opportunity.

“These so-called ‘property investors’ literally take homes away from those who need to live in them and raise prices and rents of the remaining residential stock as a result.”

Daniel Wilson Craw, deputy director at Generation Rent, also said LBS’ stance was a good step to tackle affordability but added: “If their concern is home ownership specifically, they should stop lending to landlords too.”

Advertisement

There have been moves in recent weeks to crackdown on the number of second homes and holiday homes flooding the housing market.

The Welsh government announced planning and tax changes at the start of July while local councillors in Brighton have drawn up plans to become the first city in the UK to ban second homes.

Multiple home ownership was one of the factors identified by the Joseph Rowntree Foundation last week as a driving force behind the lack of affordable housing.

The anti-poverty charity found the number of adults owning multiple properties had surged 147 per cent since 2000 while the number of 16 to 34 year-olds entering home-ownership plunged by 38 per cent.

JRF called for regulations that govern mortgage lending to be reviewed to prioritise lending towards first-time buyers over landlords – a move LBS has preempted.

The goal, Darren Baxter, JRF senior policy advisor, said, was to redistribute the housing market in the UK, reducing the size of the private rented sector and opening doors to home ownership and social housing.

Advertisement
Article continues below

“Right to Buy and the expansion of the private rented sector following the global financial crisis have already shown that rapid shifts in the distribution of homes are possible,” Baxter added.

“Reforming the private rented sector by shifting the distribution of homes within it should be the gateway to further, fundamental reform of the housing market. Reforms of this type would ensure the housing market supports those looking for somewhere to call home over those seeking assets to invest in.”

Advertisement

Change a vendor's life this Christmas

This Christmas, 3.8 million people across the UK will be facing extreme poverty. Thousands of those struggling will turn to selling the Big Issue as a vital source of income - they need your support to earn and lift themselves out of poverty.

Recommended for you

Read All
'We must remove the shackles of stigma': Five ways Labour wants to shake-up Right to Buy
Labour deputy prime minister abd housing secretary Angela Rayner
Right to Buy

'We must remove the shackles of stigma': Five ways Labour wants to shake-up Right to Buy

Rents in UK are rising at highest rate in decades. Will they keep going up?
rents uk
Renting

Rents in UK are rising at highest rate in decades. Will they keep going up?

Mum-of-three hit with 'revenge eviction' after asking for repairs: 'It felt like the end of the world'
Hazell and her three kids faced homelessness until Shelter stepped in
Renting

Mum-of-three hit with 'revenge eviction' after asking for repairs: 'It felt like the end of the world'

Housing minister admits Labour's 1.5 million homes promise will be 'more difficult than expected'
Labour housing minister Matthew Pennycook
Housebuilding

Housing minister admits Labour's 1.5 million homes promise will be 'more difficult than expected'

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Citroën Ami: the tiny electric vehicle driving change with The Big Issue
4.

Citroën Ami: the tiny electric vehicle driving change with The Big Issue