Help to Buy mostly helped high earners, IFS says

Help to Buy Schemes Favored Higher Earners, IFS Study Reveals

A recent analysis by the Institute for Fiscal Studies (IFS) indicates that the government’s Help to Buy initiative in England, designed to assist first-time homebuyers, predominantly benefited individuals with higher incomes in regions where property prices are lower. The report highlights that the program had a limited role in enhancing social mobility, despite its original goal of providing financial support to those lacking access to family funds.

Policy Framework and Regional Implementation

Launched in 2013 under the Conservative administration, the Help to Buy program encompassed two key components: a mortgage guarantee scheme and an equity loan scheme. The mortgage guarantee allowed buyers to secure mortgages with as little as 5% down payment, while the equity loan offered a government-backed 20% contribution toward deposits for new-build properties. However, these equity loan provisions have since been suspended in England and Scotland, with Wales set to terminate its version in September. Northern Ireland never adopted a similar initiative.

The mortgage guarantee scheme, meanwhile, remains active across the entire UK. The IFS study, which examines the 2013 policies, was conducted amid calls to revive the program. Its findings align with earlier critiques from the government’s official watchdog, emphasizing that the scheme’s impact on affordability was constrained by its focus on new builds, which are less common in most areas.

Disparities in Effectiveness

According to the IFS, the scheme’s benefits were most pronounced for higher earners in less expensive regions. The analysis shows that participants with greater incomes saw the largest increases in their ability to purchase homes, as the program effectively raised maximum affordable prices for those already in a position to pay more. In contrast, areas like London and the South East, where housing is costlier, saw limited advantages due to the scarcity of properties under the scheme.

“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.

Despite its peak in 2014–15, where roughly a fifth of first-time purchases were supported, the IFS argues that the program did not significantly improve housing affordability for the majority. Critics suggest it inflated property prices by enabling more spending, while supporters credit it with boosting homebuilding and creating job opportunities. The Home Builders Federation noted that the scheme played a major role in doubling housing supply within a short period, leading to a surge in affordable housing through private sector cross-subsidies.

Government Response and Future Plans

A spokesperson for the Department of Housing, Communities and Local Government acknowledged that the previous administration both introduced and phased out the equity loan component. They emphasized that an evaluation of the program is still in progress and outlined a new mortgage guarantee scheme aimed at supporting young families and renters. “While we have no current plans to reintroduce Help to Buy, we have launched a comprehensive alternative to open the door to homeownership for more people,” the spokesperson added.

Shadow housing secretary James Cleverly defended the policy, stating it “gave many thousands of people the chance to realize the dream of homeownership.” Yet, the IFS’s research underscores that the scheme’s structure and regional focus may have inadvertently widened income gaps in the housing market.