Government ‘must commit to increase housebuilding’

With buy-to-let ownership on the rise, the only way to boost owner-occupied homes is to materially grow the number of properties built, the mutual’s chief executive said.

It comes as Leeds Building Society reported record mortgage growth in the first half of the year.

New residential loans rose 22 per cent to £1.45bn for the six months to June, helping to drive profit before tax up 45 per cent to £55m.

The building society gave mortgages to 4,500 first-time buyers in the period, accounting for 37.3 per cent of total lending.

Around 20 per cent of Leeds’ loan portfolio is in buy-to-let.

Mr Hill told The Yorkshire Post that he has concerns that home ownership trends are “going in the wrong direction”.

He said: “Buy-to-let serves a social purpose, both for the borrower and for the tenant. But what I would like also to see is increases in owner occupation.

“The only way we can see that come through is if we see a material step up in the level of new build.”

In the 12 months to the end of March, 125,110 homes were completed, up 11 per cent from the previous year. However, this remains 29 per cent below the 2007 housing market peak.

Prime minister David Cameron has said the UK will be on course to deliver 200,000 homes a year from 2017.

Mr Hill said increases in homebuilding must start with strong commitments from the Government and local authorities.

He said: “Policy has to be aligned all the way through to make sure the framework has been created. Then there needs to be a lot of activity around encouraging the housebuilding industry to actually take advantage of the opportunity.”

Securing skills for the industry remains a longer-term problem, he added.

Leeds’ interim results saw assets climb to a record £12.7bn.

In addition to new mortgage lending, impairment losses fell to £5.5m from £17.8m at June 2014.

The mutual saw membership up 2,000 to a record 724,000, while saving balances grew to £9.2bn, up £100m year-on-year.

Leeds has added 120 staff to date in 2015, with more planned in the coming months. Its headcount has climbed 40 per cent since 2012.

The mutual has a “very positive outlook”, Mr Hill said. “It’s been a challenging first half of the year.

“Everybody has pulled together to deliver a fantastic performance. I think it’s an all-round performance, against a fairly flat mortgage market.”

The wider mortgage market is expected to remain materially flat through 2016, despite a boost in remortgaging as speculation builds over interest rate rises.

Leeds expects tough competition in the sector, Mr Hill said.

“We have seen some pressure on margins in the first half of this year and we expect fairly fierce competition in the second half of the year,” he said.

“This means we have to be on our mettle, but for borrowers I think that’s good news.”