Help to Buy mostly helped high earners, IFS says
Help to Buy Mostly Benefited Higher Earners, IFS Reports
A new analysis from the Institute for Fiscal Studies (IFS) reveals that the government’s Help to Buy initiative in England primarily supported individuals with higher incomes, particularly in regions where property prices are lower. The report underscores that the program had a “limited effect” on improving social mobility, despite its original goal of assisting first-time buyers lacking access to financial support from friends or family.
Launched in 2013 by the Conservative administration, the scheme aimed to boost mortgage availability by offering loans for deposits and reducing the barriers to home ownership. However, the IFS findings suggest that the program’s impact on affordability was modest, with its benefits skewed toward those already in a position to purchase homes. This conclusion was drawn from data showing that the program’s peak in 2014–15 saw around one in five first-time buyer transactions in England supported by the initiative.
The Help to Buy program consisted of two parts: a mortgage guarantee scheme and an equity loan scheme. The former allowed buyers to secure mortgages with just 5% deposits, while the latter provided a 20% government-backed loan for new-build properties. These measures were designed to lower upfront costs and encourage housing construction. However, the equity loan component is now closed to new applicants in England and Scotland, with the Welsh version set to expire in September. Northern Ireland has never had a similar scheme.
The IFS report highlights that the program’s focus on new-build properties limited its reach, as such homes are less common in many areas. This, combined with the fact that higher-income individuals could afford more, meant that the scheme amplified price increases for those who were already in a better financial position. “Help to Buy policies can help first-time buyers get on the housing ladder, in theory, but can also push up house prices,” noted Bee Boileau, an IFS research economist.
Defenders of the scheme argue that it played a critical role in expanding housing supply. The Home Builders Federation emphasized that it contributed to the doubling of housing availability in the years after its launch, creating jobs and enhancing access to affordable housing through private sector subsidies. Shadow housing secretary James Cleverly praised the policy for enabling thousands to achieve homeownership. A spokesperson for the Department of Housing, Communities and Local Government stated that the scheme was both implemented and phased out by the prior government, with an ongoing evaluation of its effectiveness.
