Guest blog: Taking action to level the playing field between banks and building societies

Julie Elliott MP recently introduced her Private Members Bill to Parliament to amend the Building Societies Act 1986. Here she outlines some of the potential benefits of these amendments.

Julie Elliott MP presenting the Bill in ParliamentThis month, I introduced my Private Members Bill to Parliament to amend the Building Societies Act 1986. If successful, my Bill will level the playing field between banks and building societies, allowing building societies to support more first-time buyers to buy their own homes. 

Number one in the ballot

Being drawn number one in the Private Members Bill ballot is a huge privilege and a massive opportunity. I’ve been an MP since 2010, representing my home city, and most MPs don’t have this chance. I’m determined to take it – and to make an impact for years to come. There is a chance that a General Election could come before the Bill completes its passage through the Commons and the Lords – but with Second Reading on 19th January, I am doing everything I can to make it happen.

I was honoured to have the support of colleagues across the house for this Bill, and it is ‘ready to go’ – having been subject to significant consultation and broad support from across the building societies and mutuals sector. 

Aspiration and ambition

There are many families in my constituency in Sunderland and across the North East who are desperate to get onto the housing ladder. That’s true of constituents throughout the UK and of young people, especially: 80% of 25-34 year olds would prefer to buy their own home than rent. I speak to so many young people for whom that ambition is still out of reach, and to their families who share that aspiration for their grown-up children but do not have the ability to help. 
This Bill, which modernises the rules around building societies, will help them do it. 
Building societies were founded to help working people own a home of their own. They are owned by their members, not shareholders, and direct a greater proportion of lending to first-time buyers than banks, but they are constrained by archaic legislation that is unfit for today’s economy. 
They are already playing a vital role in our economy: in the first nine months of 2023, building societies accounted for over a quarter of all new mortgage lending, supporting over 70,300 first-time buyers to get a mortgage and a first step onto the housing ladder. 
They’re also keeping more branches open when the banks are closing theirs in many of our constituencies. Building societies now account for 38% of all branches in the UK, up from 17% in 2014. 
By changing the Building Societies Act 1986, the sector’s lending capacity could increase to support more people into a home of their own. It’s this potential I want to unlock through the Bill, so that hard-working people in Sunderland, the North East, and every part of the UK, benefit.


Modernising the legislation around building societies is long overdue. For decades the UK’s building societies have faced different rules than the high street banks on how they fund themselves. 

Under the current Act, building societies are required by law to raise at least 50% of their funding from their members’ deposits, for example in savings accounts, with funding from other sources called wholesale funding – this is known as the ‘funding limit’. 

The funding limit is an important feature of the building society model, as it preserves their status as mutuals by ensuring they are at least 50% funded by their customers, but it also means building societies can be at a competitive disadvantage and don’t face a level playing field.  

The Bill will therefore help to make building societies more competitive long into the future, as they would be able to access emergency funding from the Bank of England in a time of financial stress without it impacting their funding limits. This will ensure that building societies will continue to be safe and secure, whilst allowing them greater space in which to operate.

Unlocking billions of extra lending

By constraining their lending activities in a way the banks aren’t subject to, crucially this is leaving a huge amount of untapped potential lending for people who are striving to get on the housing ladder or to move on from their existing home.

It’s time to modernise the rules and get rid of this anomaly, so that we can free up more support for more the people in the housing market, and especially first time buyers – because building societies have a track record of directing a greater share of their lending to first time buyers than banks do, with the most recent figures showing that 40% of mortgage lending by building societies is to first time buyers.

My Bill seeks to unlock billions of pounds of extra lending for first time buyers and homeowners. It is estimated that for every £10 billion of new lending capacity, there is potential to support an additional 20,000 average first time buyers through these changes.

So if we update the regulations in the way outlined in the Bill, it will provide a significant boost for people looking to get onto the housing ladder.

That modernisation has a purpose for my constituents. Expanding home ownership is one of the biggest challenges we face as a country. For over 200 years, building societies have helped people into a home of their own. This Bill will help them fulfil this role long into the future. 

To find out more: Contact Kate Creagh

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