Building society decides to no longer offer mortgages on second homes amid backlash and government crackdown
A major building society has said that they will no longer offer mortgages on second homes because they do not help people get on the property ladder, amid a public backlash and government crackdown on second properties.
Leeds Building Society said that they wanted to focus on helping first-time buyers and said that they stopped offering mortgages to second homes at midnight.
Richard Fearon, their chief executive, said: “We don’t believe support for second homes is compatible with our purpose to put home ownership within reach of more people.
“Second homes reduce the number of properties available for people to live in at a time when housing supply in the UK is inadequate to meet demand and needs to be increased.
“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.”
Their decision comes amid a crackdown from governments in the UK against second homes, which have been blamed for hollowing out communities by pushing house prices up beyond the levels that local residents can afford.
The Welsh Government is introducing the strictest new rules on second homes, as part of a cooperation deal with Plaid Cymru.
Following a consultation, from April, local authorities in Wales will be able to set council tax premiums on second homes and long-term empty properties to 300% from April 2023.
The criteria for self-catering accommodation being liable for business rates instead of council tax will also change at the same time, from 70 to 182 days.
The UK Government in England also intends to allow local authorities to double council tax bills on additional properties not in use or let out for at least 70 days per year.
The council of the city of Brighton in England has also voted to ban new-build second homes and holiday lets in a bid to bring down soaring house prices.
The crackdown comes after residents in the town of Whitby in the north of England voted by 95% to stop people buying new properties as second homes there last week.
The Welsh Government said earlier this year that their changes would stop second home owners from classifying homes as businesses because they are let out for one fifth of the year.
“As part of the Co-operation Agreement with Plaid Cymru, we are committed to taking immediate action to address the impact of second homes and unaffordable housing in communities across Wales, using the planning, property and taxation systems,” Economy Minister Rebecca Evans said.
“As we continue to progress the package of measures and drawing on the latest evidence base, we will keep under constant review the whole range of levers available to use and how they may be deployed most effectively to meet our policy objectives and avoid any unintended consequences.”
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Excellent news! The big question is why hasn’t the same commitment been made by Welsh building societies such as Principality, Monmouth and Swansea? Time for action.
This article is very misleading What Leeds BS have said is It will continue to lend on buy-to-let properties and holiday homes which are rented out, and said that for people with existing loans there will be no change. In future, a typical requirement for the society to lend on second homes will be that they are let out for at least 24 weeks per year.