Mortgages  

BSA urges gov’t to invest pensioner bond money in housing

BSA urges gov’t to invest pensioner bond money in housing

The Building Societies Association has written to the chancellor asking for urgent action to help those buying homes and particularly younger first time buyers, with money raised from the sale of hugely popular pensioner bonds a target for re-investment.

In advance of George Osborne’s last Budget of this parliament on 18 March, the organisation suggested that there is an opportunity for money raised by the government from the sale of the pensioner bonds to be used to off-set initial investment in housing projects.

The bonds, which are estimated to reach £15bn by the closure date of 15 May following an extension, have proved popular with savers but have prompted claims of intergenerational inequality and even claims that the scheme is an attempt to buy the sizable ‘grey’ vote.

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Pensioners are offered yields well above market leading rates on up to £10,000 worth of bonds. When the scheme was extended in February already 610,000 savers had purchased around £7.5bn worth of bonds since their launch in Janaury.

Robin Fieth, BSA chief executive, said: “Using the money raised from the pensioner bonds to make affordable housing available to young people seems a neat way for a scheme that benefits those 65 and over, to also help younger people who face such a chronic shortage of affordable housing.”

The letter also trailed the launch of BSA proposals to help fix the UK’s dysfunctional housing market on 16 March, including the creation of a new housing ministry with a secretary of state in the cabinet, rather than the responsibility being spread out amongst several departments.

It also called for a cross-party 15-year plan for the UK housing market, based on national and regional long-term demographic changes, employment, environmental changes and infrastructure.

peter.walker@ft.com