Building society says No to second homes

Leeds mortgages ‘should go to first-time buyers’

ONE of Britain’s biggest building societies is restricting mortgage offers on second homes in an attempt to help more buyers get on the property ladder.

Leeds Building Society said funding second properties was not ‘compatible with our purpose to put home ownership within reach of more people’.

The member-owned lender reassured customers it would use the spare capacity to renew its focus on other sectors, such as affordable housing and support for first-time buyers.

It will keep lending on buy-to-let properties and holiday homes, but only if they have people staying in them for the majority of the time. ‘We’ve taken this decision after a great deal of thought as we don’t believe support for second homes is compatible with our purpose to put home ownership within reach of more people,’ said Richard Fearon, chief executive of Leeds Building Society. ‘Second homes reduce the number of properties available at a time when there’s a wide consensus that housing supply in the UK is inadequate.’

He added that ‘any home other than a main residence usually lies empty most of the time, which does not serve the local community or contribute to the local economy’.

Leeds Building Society, Britain’s fifth-biggest mutual, usually lends several million pounds every year to fund second-home purchases.

According to the Scottish Government there are 23,890 second homes north of the Border as of September 2021.

But the debate over whether homeowners should be able to buy extra property has been reignited in recent months, as the cost of living crunch has laid bare the divide between those with spare savings and those who are struggling to make ends meet.

Activity in the housing market is being sustained by those who already own property or managed to build up savings during the pandemic. This has pushed the average UK home to a record high of £294,845 in June, according to Halifax’s House Price Index.

A registration scheme for holiday lets in Scotland is due to come into force from October and will require owners to apply for a licence with their local authority. All owners in the country will require a licence from July 2024 and to operate without them will be a criminal offence.