Help to Buy mostly helped high earners, IFS says
Help to Buy Mostly Helped High Earners, IFS Says
The UK’s Help to Buy initiative, launched in 2013 by the Conservative government, primarily benefited higher-income individuals in regions with lower property prices, according to a new report by the Institute for Fiscal Studies (IFS). While the scheme aimed to support first-time buyers without access to family or friend funds, the findings suggest its impact on social mobility was limited.
Program Structure and Regional Status
The policy combined two key components: a mortgage guarantee program and an equity loan scheme. The former allowed mortgages with as little as 5% deposits, while the latter offered a 20% government-backed loan for new-build properties. However, the equity loan is no longer available for new applicants in England and Scotland, with Wales set to phase it out by September. Northern Ireland has never had a similar program.
Impact on Affordability
Despite its peak in 2014–15, where roughly 20% of first-time buyer transactions in England were supported, the IFS found that the scheme did little to improve housing affordability. It noted that the program’s focus on new builds, which are less common in most areas, meant its benefits were concentrated among those who could already afford higher prices.
Criticisms and Defenders’ Arguments
Critics argue the scheme indirectly raised property prices by enabling buyers to spend more. Conversely, supporters highlight its role in boosting housing supply and creating jobs. The Home Builders Federation stated it was instrumental in doubling housing availability within a few years, leading to a surge in affordable housing options through private sector incentives.
“Help to Buy policies can help first-time buyers get on the housing ladder, in theory, but can also push up house prices,” said Bee Boileau, a research economist at the IFS.
Regional Disparities
The IFS emphasized that the scheme’s effectiveness varied by region. In London and the Southeast, where homes are more expensive, fewer properties were available under the program, limiting its support for lower-income buyers. As a result, higher earners in cheaper areas saw the most benefit.
Government Stance
A spokesperson for the Department of Housing, Communities and Local Government acknowledged the previous government’s decision to introduce and discontinue the scheme, noting an ongoing evaluation. They also mentioned plans for a new mortgage guarantee scheme, which they claim will aid young families and renters in securing homes.
Broader Context
Additional support measures exist in other devolved nations, but the IFS report highlights that the original Help to Buy design fell short of its goal to improve affordability. The analysis aligns with earlier critiques from the government’s official watchdog, which questioned the program’s role in widening income-based gaps in mortgage access.
