Building Societies: The way we were.

Robert_Sterling_3

It was 1850.
You could join a building society on the day it started up and save 25 pence per fortnight.
When the society reached a total of savings of £120
members put in bids at auction to be allowed to borrow the £120.
The bids were called the premium.
Suppose the winning bid was £30.
The winning member now:-
Continues to save £0.25 per fortnight
but now also pays £0.25 per fortnight interest on the £120
and pays the £30 premium at the rate £3 per annum.
This continues until another £120 is available and another bidding auction takes place.
After about 10 years every member will have a £120 house.
The last person to get their house will have only saved £65
but will have got £120 to buy a house.
i.e. 25 pence a fortnight or £6.50 per year for 10 years.
You could get a reasonable house for £120.
When the building society closed then all the members got the deeds of their house and any money left in the kitty was shared out equally among them.

New buildings society were starting up quite regularly so that the number of building societies peaked at about 5,000.

The first building societies had an element of unfairness about them and so Equitable Building Societies were formed.
The early Building Societies were temporary and later Permanent Building Societies were formed.
The early building societies did not have any premises and the members had to attend fortnightly meeting to pay their 25 pence.


Well that is what Grandma Sterling told me that her grandfather had told her.

greenwich

Let's hear it for progress! It's soooo much easier doing things online.