Help to Buy Primarily Benefitted Higher Earners, Think Tank Reports
The Help to Buy scheme, initiated in England in 2013, was largely ineffective in improving housing affordability and primarily assisted those who could already afford higher-priced properties, according to a comprehensive report from the Institute for Fiscal Studies (IFS). The scheme, intended to support first-time buyers, instead disproportionately benefited higher earners.
Limited Impact on Affordability and Social Mobility
The IFS research highlights that despite supporting approximately a fifth of first-time buyer purchases in England at its peak, Help to Buy made only a "limited difference to housing affordability." The scheme's restriction to new build properties, which are often scarce in many areas, limited its reach and overall effectiveness. Consequently, the programme had a negligible impact on social mobility.
The study found that the more an individual earned, the greater the benefit received from the scheme. This meant it "increased maximum affordable prices most among those who could already afford higher prices." Furthermore, the equity loan component was less beneficial in pricier regions like London and the South East due to the scarcity of eligible homes, leading to higher earners in more affordable areas gaining the most.
Differing Perspectives on the Scheme's Legacy
Critics have long argued that Help to Buy inflated house prices by enabling buyers to offer more. However, proponents maintain it successfully helped numerous individuals purchase homes and significantly boosted housebuilding. The Home Builders Federation, for instance, stated the scheme was a "major factor in the doubling of housing supply" and generated thousands of jobs.
While the Help to Buy equity loan schemes are now closed to new applicants across the UK, a spokesperson for the Department of Housing, Communities and Local Government noted that an "evaluation of the scheme is ongoing." The government has since launched a permanent mortgage guarantee scheme aimed at broadening access to homeownership for more families.
