TL;DR
Building societies are member-owned mutual organisations that must keep at least 75 percent of their lending in residential mortgages under the Building Societies Act 1986. Eligible deposits are protected by the FSCS up to 85,000 pounds. Nationwide is the world's largest building society by assets. Around 43 building societies remain in the UK today, down from over 700 in the 1980s.
Last reviewed: June 2026
Building societies have been part of the UK financial landscape since the late 18th century. They were founded to help working people pool savings and collectively finance home purchases, a model that remains legally embedded in their structure today. Unlike banks, which are owned by shareholders and distribute profits as dividends, building societies are mutuals owned by their members, which in practice means their savings customers and mortgage borrowers.
This guide explains how building societies differ from banks, what protections apply, which are the largest in the UK, and how their savings rates compare to bank alternatives.
KEY FACTS
- There are currently around 43 building societies in the UK, supervised by the PRA and FCA.
- Building societies must have at least 75 percent of their lending in residential mortgages under the Building Societies Act 1986.
- Members (savers and mortgage borrowers) are the beneficial owners, not external shareholders.
- FSCS protection covers eligible deposits up to 85,000 pounds per person per institution.
- Nationwide completed its acquisition of Virgin Money in 2024, becoming an even larger mutual.
- Building societies pay an average higher rate on easy-access savings than high-street banks according to Bank of England data.
How building societies differ from banks
The fundamental structural difference between a building society and a bank is ownership. A bank is a company owned by shareholders who expect a financial return on their investment. A building society is a mutual organisation owned by its members, meaning the people who save with it and borrow from it. There are no external shareholders to pay dividends to, which means any surplus generated can in principle be returned to members through better rates or lower fees.
Building societies are governed by the Building Societies Act 1986, which imposes a statutory requirement that at least 75 percent of their total lending must be secured on residential property. This restriction prevents building societies from expanding aggressively into commercial lending, corporate bonds or other higher-risk activities, which is one reason they tend to have more conservative balance sheets than universal banks.
Building societies are authorised and regulated by the same bodies as banks: the PRA for prudential matters and the FCA for conduct. They are subject to the same capital requirements under Basel III and the same consumer protection rules. The main practical difference in terms of regulation is the mutual ownership structure and the lending restriction.
Governance at building societies is conducted by a board of directors and overseen by a member-elected council or supervisory committee in larger societies. Members can vote at annual general meetings and stand for election to governance bodies. In practice, member engagement varies considerably between societies.
The largest UK building societies in 2026
Nationwide Building Society is the largest building society in the world by assets, with total assets exceeding 300 billion pounds following its 2024 acquisition of Virgin Money. It has approximately 16 million members and offers a full range of current accounts, savings, mortgages and insurance products. Unlike most building societies, Nationwide provides current account services and competes directly with major banks on the high street.
Yorkshire Building Society (YBS) is the second largest, with total assets of around 60 billion pounds and around 3 million members. It offers savings accounts and mortgages but does not provide current accounts. YBS owns the Chelsea Building Society and Accord Mortgages brands.
Coventry Building Society has assets of approximately 55 billion pounds and is known for consistently competitive savings rates. It does not provide current accounts. Leeds Building Society, West Bromwich Building Society, Skipton Building Society and Principality Building Society round out the top tier.
Smaller societies such as Leek United, Tipton and Coseley, and Ecology Building Society operate in niche markets or specific geographies. Ecology Building Society focuses exclusively on sustainable construction and ecological building projects and offers savings accounts to members who share its ethical values.
Building society savings rates vs bank rates
Building societies have historically offered competitive savings rates relative to high-street banks, partly because they do not need to generate shareholder returns. However, this advantage has narrowed in recent years as challenger banks (Atom, Chase, Tandem) and fintech platforms (Trading 212, Chip) have entered the easy-access savings market with aggressive rates funded by investment capital rather than structural efficiency.
As of June 2026, easy-access savings rates from building societies range from around 3.5 to 4.8 percent AER, with notice accounts and fixed-rate bonds offering higher rates for locking funds away. Coventry Building Society and Principality Building Society have regularly appeared near the top of easy-access rate tables. Yorkshire Building Society's regular saver product at 7 percent AER (subject to terms) is among the highest rates available for that product type outside of Nationwide's own offering.
Fixed-rate bonds from building societies, often called fixed-term savings accounts or fixed-rate ISAs, typically offer rates between 4.0 and 4.9 percent AER for one to five year terms as of mid-2026. Rates are broadly comparable to bank equivalents. For tax-efficient savings, building society Cash ISAs are widely available and can be transferred between providers without losing the ISA wrapper.
FSCS protection for building society deposits
Deposits with UK-authorised building societies are protected by the FSCS up to 85,000 pounds per eligible person per institution. The FSCS was established under the Financial Services and Markets Act 2000 and is funded by levies on authorised firms. In the event of a building society failure, the FSCS aims to pay out protected deposits within seven working days.
The 85,000 pound limit applies per institution, not per account. If you hold a savings account and a cash ISA with the same building society, the combined balance is assessed against the single 85,000 pound limit. Joint accounts are covered up to 170,000 pounds (85,000 pounds per person). Temporary high balances such as property sale proceeds are protected up to 1 million pounds for six months after receipt.
Because building societies are legally separate entities from banks, they each have their own FSCS limit. Nationwide and Lloyds Bank are different institutions, so a customer with 85,000 pounds in each has two separate FSCS limits in force. The merger of Nationwide and Virgin Money means deposits with both brands now fall under a single FSCS pot.
How to open a building society savings account
Most major building societies offer online account opening. Nationwide, Yorkshire Building Society, Coventry Building Society and Skipton Building Society all support full digital applications for savings accounts. Identity verification is typically conducted via open banking, credit reference agency checks, or document upload rather than requiring a branch visit.
Some smaller building societies, particularly regional mutuals, may still require in-branch applications or postal account opening. This can be a barrier for savers outside the society's operating geography. However, it also reflects the local, community-focused nature of many smaller building societies.
Opening a building society savings account makes you a member of that society. Membership rights include voting at AGMs, receiving the annual report, and in some cases receiving loyalty bonuses or enhanced rates available only to existing members. Nationwide's Fairer Share payment, distributed in 2023 and 2024, was an example of a member benefit paid from surplus profits to qualifying members.
Frequently asked questions
Are building societies safer than banks?
Both UK-authorised banks and building societies are regulated by the PRA and FCA and are covered by the FSCS up to 85,000 pounds. Building societies tend to have more conservative lending portfolios due to the 75 percent residential mortgage requirement, but this does not automatically make them safer than all banks. Both sectors have failed institutions historically, which is precisely why FSCS protection exists.
Can I open a building society account if I do not live locally?
For major building societies with national operations, yes. Nationwide, Yorkshire Building Society, Coventry and Skipton all accept customers from across the UK. Some smaller regional societies may restrict membership to people living or working in a specific area. Check the specific society's eligibility criteria before applying.
What happens if a building society is taken over by a bank?
Several building societies have demutualised and converted to banks over the years, including Halifax, Bradford and Bingley, and Alliance and Leicester. When a building society converts, members typically receive a one-off cash or share payment. Following conversion, the institution loses its mutual status and becomes subject to shareholder ownership. Existing deposit protection continues.
Is a building society account the same as a bank account for FSCS purposes?
Yes. Eligible deposits at UK-authorised building societies receive the same FSCS protection as bank deposits, up to 85,000 pounds per person per institution. The FSCS does not distinguish between banks and building societies for protection purposes.
