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Will!

Building Societies, B T L And The Co-Operative Party

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A little while ago I wrote to my local building society, of which I was a long-standing member, to find out how to propose a motion for their next Annual General Meeting. My intention was to propose a motion that the society should not provide buy-to-let mortgages as these go against the original purpose of building societies, which was the provide the means for members to save and borrow to own their own homes. The society required the signatures of fifty members for a motion to be proposed and would not provide me with any means to contact other members to ask for their support. I withdrew my savings from that society.

The Co-operative Party, of which I am a member, is canvassing for policies and one of their themes is housing. I'm going to suggest it should be Co-op party policy that building societies cannot offer buy-to-let mortgages for the reason above. Any thoughts?

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A little while ago I wrote to my local building society, of which I was a long-standing member, to find out how to propose a motion for their next Annual General Meeting. My intention was to propose a motion that the society should not provide buy-to-let mortgages as these go against the original purpose of building societies, which was the provide the means for members to save and borrow to own their own homes. The society required the signatures of fifty members for a motion to be proposed and would not provide me with any means to contact other members to ask for their support. I withdrew my savings from that society.

The Co-operative Party, of which I am a member, is canvassing for policies and one of their themes is housing. I'm going to suggest it should be Co-op party policy that building societies cannot offer buy-to-let mortgages for the reason above. Any thoughts?

Sorry, just spotted this.

Regarding the building society thing, I think that these very modest forms of activism are tremendously worthwhile.

Regarding your policy, and I'm sorry that I don't have a great deal of time right now, there is a problem which is that essentially since the 1980s the mutuals have sat within a regulatory framework which means that regardless of their historical roots, they are really just private companies run for the benefit of their executives. A key difference between historical mutuals and modern mutuals is that the loans made in the past were funded with members' deposits. Over the last 30-35 year that model has been replaced with the mutuals as intermediaries between their borrowers and a wide range of 'depositors' including their members, but also including bond holders and the wholesale money markets.

Long and short of it, the mutuals are gone and they've been gone for a long time now. Nationwide is notionally a mutual but is actually a great example of how the mutuals have transformed.

That said, I think that there is merit in advocating the policy you propose, but it should be applied to all mortgage lending, regardless of the exact legal status of the lender. This is not an extreme policy, it's not a million miles from what has happened in the owner-occupied market.

Edited by Bland Unsight

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I recently stumbled across this 2009 potted history which might help a little in putting some flesh on my post above.

Thanks. I have a limited amount of faith in the Co-op, their "ethical" approach seems like a fig-leaf for just as much sharp practice as any other retail financial institution, but their policies do at least pay lip service to the concept of mutual benefit which is why I hope they might adopt my idea.

Voter apathy is clearly what allows building society boards to run the societies into the ground for their own enrichment; unfortunately I'm not sure even HPCers could organise enough to make a difference.

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