Help to Buy mostly helped high earners, IFS says
Help to Buy Mostly Benefited Higher Earners, IFS Report Finds
The Institute for Fiscal Studies (IFS) has revealed that the government-backed housing initiative in England, launched in 2013, primarily aided individuals with higher incomes, even in regions where property costs are lower. Despite its aim to assist first-time buyers lacking financial support from family or friends, the report suggests the scheme had a minimal effect on improving access to affordable housing for broader groups.
Structure and Scope of the Scheme
Help to Buy encompassed two key components: a mortgage guarantee program and an equity loan program. The former enabled buyers to secure mortgages with just 5% deposits, while the latter provided a 20% government loan for new-build properties, lowering the required down payment. These programs are now closed to new applicants in England and Scotland, with Wales set to discontinue its version by September. Northern Ireland remains without a comparable initiative.
The mortgage guarantee scheme has been extended to all UK regions, whereas the equity loan aspect is regionally limited. Other devolved nations have their own distinct home-buying support systems, according to the IFS analysis.
Impact on Affordability and Social Mobility
Despite the scheme’s peak usage in 2014–15, where roughly 20% of first-time buyer transactions in England were supported, the IFS noted its limited influence on housing affordability. The research highlights that new-build properties, which were central to the scheme, were uncommon in most areas, leaving lower-income buyers with fewer options.
According to the IFS, the scheme’s benefits were concentrated among higher earners, as it increased the maximum prices affordable to those already in a position to handle higher costs. This suggests that while it provided support, it may not have significantly addressed affordability barriers for all demographics.
“Help to Buy policies can help first-time buyers get on the housing ladder, in theory, but can also push up house prices,” stated Bee Boileau, a research economist at the IFS.
Analysts argue the program indirectly raised property prices by encouraging more spending power among participants. However, supporters emphasize its role in boosting housing supply and enabling thousands to purchase homes. “The scheme was a major factor in the doubling of housing supply that occurred in the few years following its introduction, creating tens of thousands of jobs and leading to a boom in affordable housing through private sector cross-subsidy,” said the Home Builders Federation.
James Cleverly, the shadow housing secretary, praised the policy for offering thousands the opportunity to achieve homeownership. A spokesperson for the Department of Housing, Communities and Local Government confirmed that the scheme was introduced and phased out by the previous administration, with an ongoing evaluation. They also highlighted the launch of a new mortgage guarantee initiative designed to support young families and renters.
