What is a building society and how does it work?

A building society is a financial institution owned by its members rather than by shareholders. When you open a savings account or take out a mortgage with a building society, you become a member and part-owner of it, and the society is run for the benefit of its members instead of shareholders¹. There are 42 building societies in the UK, serving almost 26 million consumers and holding total assets of over £507 billion³.

Building societies are a major part of the UK's savings and mortgage markets. Together with mutual-owned banks, they hold residential mortgages of £499.1 billion, which is 29% of the total outstanding in the UK, and £502.2 billion of retail deposits, 23% of all such deposits⁴. They account for 46% of all cash ISA balances⁴ and provide 35% of all first-time buyer lending⁵.

A mutual owned by its members, not shareholders

Building societies are referred to as "mutuals", which means they are owned by their members¹. A mutual is run for the benefit of its members instead of shareholders². This is the core difference between a building society and a bank: a bank answers to shareholders who expect a return on their investment, while a building society answers to the people who save with it or borrow from it.

Membership comes automatically. You become a member when you open a savings account, or take out a mortgage with a building society². As a member you are more than just a customer: unlike a depositor with, or borrower from, a bank, you have rights to receive information and to voice your opinions on the way your building society is run⁷.

Building societies operate on the principle of "one member, one vote"⁸. That means a member with £50 in a savings account has the same vote at the annual general meeting as a member with a large mortgage. Typically, a society will have a board of between seven and 15 directors, and all directors must themselves be investing members of the society⁸.

Members' rights include the right to receive information on the activity of the society, including the summary financial statement, and notification of the annual general meeting and any special general meeting⁹. Depositors are not automatically sent a copy of the summary financial statement, although copies are generally available from societies on request⁹. One boundary worth knowing: customers of a subsidiary of a building society are not members of the society⁸. So if you hold an account with a society's separately owned banking arm, you are a customer of that subsidiary rather than a member of the mutual.

How a building society works: savers' money, members' mortgages

A building society's basic business model has changed little in two centuries: it takes deposits from savers and lends them out as mortgages. Building societies offer savings and mortgage accounts and, often, a wide range of other financial services⁸. The money a society lends against property comes overwhelmingly from the money its members save with it, which is why the two sides of the business are so closely linked.

The scale of both sides is large. Building societies help almost 23 million people build their financial resilience, securely holding £362 billion in savings, with mortgages totalling £370 billion¹⁰. Building societies and credit unions are customer-owned financial institutions based across the UK in local communities³, and building societies have all of their headquarters outside London¹¹.

Because there is no separate group of shareholders to pay, the model is designed to return value to members. Last year members received an extra £4 billion in additional benefits compared to the rates and benefits offered by banks⁶. That figure covers building societies' members only and excludes mutual-owned banks, and it is the sector's own estimate of the combined value of better rates and other benefits.

The mutual structure also shapes how societies are governed. Since all directors must themselves be investing members⁸, the people running the society hold the same interest in it as any other member. Decisions at general meetings are taken on the one member, one vote principle rather than weighted by how much money each member has⁸.

Savings accounts, fixed rate bonds and cash ISAs

Savings are the foundation of every building society, and most societies offer the full range of savings products: easy access accounts, notice accounts, fixed rate bonds, regular savers and cash ISAs. Building societies account for 40% of all cash ISA balances on their own³, and building societies and mutual-owned banks together account for 46% of all cash ISA balances⁴. Some earlier figures put the combined share at 47%¹², so the exact percentage moves a little over time, but the sector holds close to half of the UK's cash ISA money.

The types of account work the same way at a building society as anywhere else:

• Easy access accounts let you pay in and take out whenever you like, usually with a variable rate.
• Fixed rate bonds pay a set rate for a set term, typically one to five years, and usually restrict access until maturity.
• Cash ISAs pay interest free of income tax, within the annual ISA allowance.
• Notice accounts require a set period of notice before each withdrawal.
• Children's accounts are offered by societies such as Nottingham Building Society, which states that eligible savings are protected under the Financial Services Compensation Scheme¹³.

If you think there may be savings in a lost bank or building society account, a search can be carried out by using a free application online¹⁴, and the Building Societies Association publishes a factsheet on tracing lost accounts¹⁵. Research from the BSA has found that 39% of those aged 18 to 34 hold their savings in a current account¹⁶, which typically pays little or no interest, so simply moving savings into a dedicated savings account can be the first step.

For more detail, see our guides to types of savings account, fixed-rate bonds and how to open a savings account.

Mortgages from building societies: 35% of first-time buyer lending

Building societies are a significant force in the mortgage market, and especially in first-time buyer lending. Building societies now provide 35% of all first-time buyer lending⁵. Over the past three years, building societies and mutual-owned banks have provided more than 360,000 mortgages to first-time buyers¹⁷.

The sector's lending reaches groups that can struggle elsewhere. Almost a quarter (23%) of building societies' first-time buyer lending supports buyers with deposits of less than 5%⁵, and one in ten (10%) helps first-time buyers aged over 45⁵. Nearly half (46%) of building societies' first-time buyer lending was to borrowers under 30¹⁸. The sector has also argued for policy changes to help first-time buyers: Nationwide Building Society has stated that making a stamp duty exemption permanent would allow it to lend an additional 10,000 first-time buyer mortgages and around £2.5bn of additional lending per year¹⁹.

You can apply for a mortgage direct to a building society, or other type of lender, or alternatively use a regulated mortgage broker to help you²⁰. If you are self-employed, the building society would usually want to see your accounts from recent years²⁰. Some societies also offer specialist products: certain building societies provide finance for self and custom build projects, including Buckinghamshire Building Society²¹.

For a full explanation of the process, see our guide to mortgages, and for the practical steps of buying, buying a home.

What share of UK mortgages come from building societies?

Building societies and mutual-owned banks, together with their subsidiaries, hold residential mortgages of £499.1 billion, which is 29% of the total outstanding in the UK⁴. The same 29% share appears consistently across the sector's figures for 2025 and 2026, though the balance itself has grown from £485 billion in late 2025 to £499.1 billion by July 2026¹².

The share of new lending is higher than the share of existing balances. In the six months to September 2025, building societies and mutual-owned banks provided 32% of the UK's net lending in the period, and more than 220,000 new mortgages were approved, representing 31% of all market approvals⁶. Building societies alone provided 59,861 mortgages to first-time homebuyers in that period⁶.

Looking at building societies alone, rather than including mutual-owned banks, the share is smaller: together with their subsidiaries, building societies account for 23% of total mortgage balances outstanding in the UK and have helped over 3.5 million families and individuals to buy a home³. An earlier BSA statistic put building societies' share at 24% of total UK mortgage lending in the first quarter of 2023²². The difference between the figures comes down to what is counted: the 29% figure includes mutual-owned banks such as those owned by Nationwide, while the lower figures cover building societies alone.

Building society or bank: what differs for customers

For everyday purposes, a building society account works much like a bank account. Since January 2008, data from building societies have been collected on the same basis as for UK-resident banks²³, which reflects how similar the two types of institution have become in practice. Many societies offer current accounts as well as savings: a bank or building society account, also called a current account, is the easiest way to access your payments²⁴.

The differences that matter to a customer are mostly about ownership and service:

Customer satisfaction consistently favours the mutual model. In a 2023 survey, 87% of building society customers would recommend their provider to friends and family, against 75% of bank customers, and 86% of building society customers believe their provider treats them fairly, against 78% of bank customers¹⁰. In 2024, Which? asked 4,524 members of the public to rate their bank or building society²⁵.

There are practical similarities too. A bank or building society can refuse to open an account for you, does not always have to give a reason, and there is usually nothing you can do about it, though ex-prisoners may find it particularly difficult²⁶. It is against the law for a bank or building society to discriminate against you, for example because of your race, sex, disability, religion or sexuality, and such discrimination can be complained about to the Financial Ombudsman Service²⁷. If you have a complaint about a bank or building society, the same dispute process applies to both²⁷.

For a fuller comparison from a saver's point of view, see saving with a bank or a building society.

The size of the sector: deposits, mortgages and staff

Building societies and mutual-owned banks have total assets of almost £670 billion⁴. They hold £502.2 billion of retail deposits, accounting for 23% of all such deposits in the UK⁴, and residential mortgages of £499.1 billion, 29% of the UK total⁴. Building societies employ around 52,300 full and part-time staff, and all of their headquarters are outside London¹¹.

The sector operates through approximately 1,300 branches, holding a 35% share of branches across the UK⁶. Some 2025 releases put the share at 30%¹², with the more recent figures at 35%, so the exact proportion depends on the date and what is counted. Either way, building societies are a substantial and growing presence on the high street as bank branches close: the number of building society branches in operation fell from 6,954 in 1986 to 1,925 in 2023²⁸, but the society network now represents a much larger share of what remains.

The sector's local presence has practical effects. In BSA research on scams, 75% of customers say having a branch makes managing money easier²⁹, and building societies have highlighted their role in tackling record levels of scams, where in-person service matters for customers who are being pressured by fraudsters²⁹. Building societies serve almost 26 million consumers across the UK³, and the sector continues to grow as consumers seek better value⁶.

Cash ISA allowance changes and what they could mean for savers

Because building societies hold close to half of the UK's cash ISA balances⁴, proposed changes to the cash ISA allowance matter greatly to them and to their savers. The annual cash ISA allowance is currently £20,000, and there have been repeated proposals to cut it. The BSA has warned that a cut in the annual Cash ISA limit from £20,000 to £5,000 could lead to 17,000 fewer mortgage loans and reduce GDP by around £7 billion over five years¹². The argument is that cash ISA deposits are a key source of funding for societies' mortgage lending, so shrinking the allowance would shrink the pot of money available to lend.

The BSA's position is firm: it strongly agrees with the recommendation not to cut the Cash ISA limit³⁰. Its chief executive, Robin Fieth, has argued that cutting the allowance is "all downside":

The BSA also argues that cutting the limit would benefit those with significant financial resources who can access other investment options, while working people and pensioners would lose a trusted way to grow savings securely³⁰.

Separately from the allowance, there is a voluntary agreement between The Building Societies Association, The Investing and Saving Alliance (TISA) and UK Finance on cash ISA transfers³¹, which is intended to make moving a cash ISA between providers work smoothly. For how cash ISAs compare with ordinary savings accounts, see cash ISA vs ordinary savings, and for the tax rules, how tax on savings interest works.

How your money is protected at a building society

Money in a building society is protected in the same way as money in a bank. The Financial Services Compensation Scheme (FSCS) is set up to protect you if your bank, building society or credit union runs into financial difficulty³². Providers state this plainly: at Nottingham Building Society, for example, eligible savings are protected under the Financial Services Compensation Scheme¹³.

The key points for a saver:

• The protection applies to banks, building societies and credit unions alike³².
• Money in a bank, building society, or PayPal account counts as savings for the purposes of rules on capital, such as those used in benefit assessments³³.
• Protection applies per licensed institution, so if a building society operates more than one brand under one licence, the balances across those brands can count together towards one limit.

For how the scheme works in detail, what the limit is and who is not covered, see our guide to FSCS protection for savings, and for money above the limit, what happens to money above the FSCS limit.

Who represents building societies: the Building Societies Association

The Building Societies Association (BSA) is the trade association representing mutual lenders and deposit takers, including all of the UK's building societies⁸. It represents all 42 UK building societies, as well as two mutual-owned banks and 7 credit unions³⁴, and it covers all UK building societies in its consumer information work¹⁵. Its chief executive is Robin Fieth³⁰.

For consumers, the BSA is a useful source of free information. It publishes consumer factsheets on topics including your rights as a building society member⁷, the difference between a shareholder and a depositor⁹, how to get a mortgage²⁰, self and custom build finance²¹ and tracing lost savings accounts¹⁵. It also publishes the sector's statistics and speaks publicly on policy questions that affect savers and borrowers, from cash ISA rules to first-time buyer support⁵.

The BSA is not a regulator and does not handle complaints about individual societies. Complaints about a building society go first to the society itself and then, if unresolved, to the Financial Ombudsman Service²⁷. For free, impartial help with money questions, MoneyHelper and the Building Societies Association's own factsheets are good starting points.