Building Society’s Holiday Let Lending in Jeopardy

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Martese Carton, the Director of Mortgage Distribution at Leeds Building Society, has revealed that the institution is currently contemplating a potential shift in its lending policy concerning buyers of holiday lets. The decision is driven by a strategic evaluation of market dynamics and the housing landscape.

Carton further highlighted the sobering statistic that Leeds Building Society has calculated – an anticipated 426,000 aspiring first-time buyers could face being priced out of the housing market over the next five years. This alarming figure translates to an average of 233 individuals daily who may find themselves unable to step onto the property ladder, prompting the society to reevaluate its lending practices in response to the evolving market challenges.

In a column for the Yorkshire Post, Martese Carton emphasizes the distinctive challenges confronting today’s first-time buyers. This generation grapples with a triple combination of historically high house prices, substantial deposit values, and elevated mortgage repayments, setting them apart from their predecessors. The recent blend of increased interest rates and rising deposit requirements has resulted in average deposit values reaching £73,100 by March 2023, constituting approximately 26% of the total property purchase price.

This situation highlights the formidable hurdles faced by first-time buyers in the current property market landscape. The triple challenge of high house prices, substantial deposits, and elevated mortgage repayments paints a challenging picture for those seeking to step onto the property ladder, demanding innovative solutions and supportive measures to address these issues.

In considering additional support for first-time buyers, the Leeds Building Society is exploring the possibility of ceasing new lending for holiday lets, particularly in areas where local support for such action exists. Martese Carton, the director of mortgage distribution, emphasizes the need to strike a balance between the positive impact of holiday lets on local economies and their potential adverse effects on housing for residents.

The proposed measure, still under deliberation and not yet implemented, would apply exclusively to new mortgage lending in specific locations, with agreement from local councils. Existing customers would remain unaffected by this potential change. This cautious approach reflects the society’s commitment to addressing the housing crisis while acknowledging the complexities of the holiday let market’s impact on housing availability and local communities.

The Leeds Building Society has initiated a 12-month pilot scheme to evaluate the potential impact of discontinuing new lending for holiday lets in specific locations, a move under consideration to strike a balance between the benefits to local economies and the impact on housing availability for residents. The society’s Director of Mortgage Distribution, Martese Carton, underscores the importance of every generation having a place to call home and acknowledges the need for significant changes in the housing market. The proposed action aims to address housing challenges and ensure homes become more affordable, accessible, and available.

Carton emphasizes that the pilot scheme, if implemented, would only affect new mortgage lending, with existing customers remaining unaffected. The society’s decision aligns with its commitment to expanding home ownership opportunities, as demonstrated by their previous move in August 2022 to cease lending for personal second homes. The focus on building more homes remains at the forefront of their long-term strategy to address housing issues and meet the growing demand for affordable housing.