This is when the current government pushes through bills that would have not otherwise passed because of the dissolved Parliament ahead of the general election.
The act was introduced by Julie Elliott MP and will give building societies a greater capacity to lend.
The previous law meant building societies were required to raise at least 50% of their funding from savings deposits, which was intended to preserve their mutual status. However, as the limit also included other funding such as cash from the financial markets or the Bank of England, it restricted the lending capacity of building societies, especially when compared to banks.
The amended act will allow building societies to increase their capacity and access emergency funding from the Bank of England without impacting their funding limits.
‘Strong cross-party support for building societies’
The Building Societies Association (BSA) said modernising the legislation was “long overdue”.
The association said mutuals played a “crucial role” in the UK economy and made up a quarter of all new mortgage lending in the first nine months of 2023.
It said the change would help mutuals to serve more borrowers and first-time buyers, as well as level the playing field between building societies and banks.
Robin Fieth, chief executive of the BSA, said: “The fact that this bill has been able to successfully complete the necessary parliamentary stages as part of wash-up is testament to the strong cross-party support for building societies and the important role they play in our communities. Our thanks to Julie Elliott MP, who introduced this bill, to Lord Kennedy of Southwark, who took it through the Lords, and to Economic Secretary to the Treasury Bim Afolami MP and his team at HM Treasury for all their support in ensuring it made it to the statute book.
“The new act will help level the playing field for the UK’s building societies and give them the capacity to lend more into the economy. It’s high time the 1986 Act was updated to reflect the needs of today’s economy. The changes brought in by this new act will drive greater competition in the mortgage market, which will give mortgage customers more choice, and support a healthy marketplace.”
