Help to Buy mostly helped high earners, IFS says
Help to Buy Scheme Benefits High Earners More Than Lower-Income Buyers, IFS Reports
A recent analysis by 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 suggests that the scheme had a minimal effect on improving social mobility, despite its original goal of aiding first-time buyers lacking financial backing from friends or family.
Structure and Purpose of the Scheme
Launched in 2013 by the Conservative administration, Help to Buy combined two components: a mortgage guarantee program and an equity loan program. The former allowed buyers to secure mortgages with just a 5% deposit, while the latter offered a 20% government-backed loan for new-build properties, reducing the required upfront payment. These policies aimed to expand access to housing by easing the burden of initial deposits.
However, the IFS study highlights that the scheme’s impact on affordability was limited. It found that by 2014–15, roughly 20% of first-time home purchases in England were supported by the program, yet this did not significantly lower housing costs for most participants. The report attributes this to the scheme’s focus on new-build properties, which are less common in many areas.
Regional Disparities and Criticisms
According to the IFS, the scheme disproportionately benefited those in regions with more affordable housing, where higher earners could leverage the support to purchase homes. In contrast, buyers in pricier areas like London and the South East saw less advantage, as fewer properties were available under the program. The analysis further notes that participants with higher incomes derived the most benefit, as the program increased the maximum prices they could afford.
“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.
Critics argue that the scheme contributed to rising property costs by enabling more spending power among buyers. Meanwhile, supporters emphasize its role in boosting housing supply and creating opportunities for first-time buyers. The Home Builders Federation noted that the policy played a key part in doubling housing supply within a short period, generating jobs and expanding affordable housing options through private sector partnerships.
Current Status and Government Response
Help to Buy equity loan schemes have now closed to new applicants in England and Scotland, with the Welsh program set to terminate in September. Northern Ireland never had a similar equity loan initiative. The mortgage guarantee scheme, however, remains active across the UK. Other home-buying programs exist in devolved nations, offering varied support structures.
“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 the supply of affordable housing provided through private sector cross-subsidy,” the Home Builders Federation said.
A government spokesperson stated that Help to Buy was both introduced and phased out by the previous administration, with an ongoing evaluation of its effectiveness. They added that while no new scheme is currently planned, a broader mortgage guarantee program is being implemented to support more young families and renters.
Shadow housing secretary James Cleverly defended the policy, claiming it enabled “many thousands of people” to achieve homeownership. The IFS’s findings, however, challenge the notion that the scheme universally improved access to housing, particularly for lower-income groups.
