Help to Buy mostly helped high earners, IFS says

Help to Buy Mostly Helped High Earners, IFS Says

A prominent think tank has found that the government’s Help to Buy initiative in England primarily benefited higher-income individuals, even in regions where property prices are lower. The scheme, launched in 2013 by the Conservative government, was designed to assist first-time buyers lacking financial support from family or peers. However, the Institute for Fiscal Studies (IFS) reports that it had “limited impact” on improving social mobility.

Policy Components and Geographic Reach

The program included two key elements: a mortgage guarantee scheme and an equity loan scheme. The former expanded access to mortgages with as little as a 5% deposit, while the latter offered a government-backed 20% loan for new-build properties, reducing the required down payment. However, equity loan schemes are no longer open to new applicants in England and Scotland, with the Welsh version set to close in September. Northern Ireland lacks a similar initiative.

The mortgage guarantee scheme has been extended nationwide across the UK. Other home-buying support programs exist in devolved regions, reflecting varied approaches to housing affordability. Despite its peak in 2014–15, where roughly 20% of first-time buyer purchases were supported, the IFS noted that “Help to Buy made only a limited difference to housing affordability.”

Impact on Affordability and Social Mobility

The IFS research highlighted that the scheme disproportionately aided those with higher earnings. It found that the program increased maximum affordable prices most among individuals already capable of paying more, suggesting it did not significantly lower barriers for lower-income buyers. Additionally, the scheme’s focus on new-build properties, which are less common in many areas, limited its effect on overall affordability.

“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.

The IFS’s findings align with earlier criticisms from the government’s official watchdog. While the scheme supported homeownership for some, it failed to substantially address affordability for a broader range of buyers. Critics argue that it inflated property prices by allowing more spending, while supporters credit it with boosting housing supply and creating job opportunities.

“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,” claimed the Home Builders Federation.

Defenders of Help to Buy emphasized its role in enabling homeownership for many. Shadow housing secretary James Cleverly noted that the policy “gave many thousands of people the chance to realise the dream of homeownership.” A Department of Housing, Communities and Local Government spokesperson added that the program was both introduced and phased out by the prior administration, with ongoing evaluations. They also mentioned a new mortgage guarantee scheme aimed at supporting young families and renters.