Rebuilding society

Perhaps the biggest development risk relates to demand not turning up at the point of completion, or at least not at the right price. This can be avoided when the builders of the scheme are those that will eventually occupy it, as was the case with the original building societies. These first took root in Birmingham towards the end of the 18th century to support a generation of workers who had moved into the rapidly industrialising region, but who individually had few resources. The societies were owned by the members and had the sole aim of building a home for each of them. These were hence: (a) ‘terminating’, meaning that they were wound up when this single objective was complete, and (b) ‘mutual’, and so any residual profits were distributed between them. A wave of demutualisations, mergers and acquisitions by the banks starting in the 1980s has significantly thinned out a once-prolific model. There is one large building society left (Nationwide) and a handful of mid-tier players, but they are no longer terminating and hence nowadays more closely resemble banks, moving them away from their historic purpose. Nevertheless, last week Nationwide obtained approval for a scheme of 239 new homes in Swindon. The scheme will be not-for-profit, with the intention of creating a multigenerational community and is designed to set a ‘blueprint’ for other building societies to follow. In a world where crowd funding takes a new meaning, could a modern breed of technologically-enabled mutual societies be part of the solution to the housing crisis?