Help to Buy mostly helped high earners, IFS says

Help to Buy Mostly Benefited Higher Earners, IFS Finds

A 2013 government initiative aimed at aiding first-time home buyers in England, the Help to Buy program, primarily supported individuals with higher incomes, according to a recent analysis by the Institute for Fiscal Studies (IFS). The report highlights that while the scheme was designed to assist those lacking financial support from family or friends, its impact on social mobility remained constrained.

Structure of the Scheme

The policy included 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 government-backed 20% loan for buyers of new properties, reducing the required down payment. However, the equity loan component has since been suspended in England and Scotland, with Wales planning to end its version in September. Northern Ireland never adopted a similar program.

The mortgage guarantee scheme, now permanently active across the UK, has been credited by supporters for increasing housing supply and creating job opportunities. They argue it contributed to a surge in affordable housing availability through private sector incentives.

Impact on Affordability

Despite its peak in 2014–15, when about a fifth of first-time buyer purchases were supported, the IFS noted that the scheme had “limited effect” on improving housing affordability. The report explains that the focus on new builds, which are uncommon in most regions, meant higher-income individuals gained the most benefit, as they could afford larger deposits and thus access the higher price limits the program encouraged.

Additionally, the IFS found that the scheme’s assistance was less effective in high-cost areas like London and the South East, where fewer homes were available under the program. This meant participants in these regions saw minimal gains, while those in cheaper areas reaped greater rewards.

“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.

Debates and Perspectives

Critics argue the scheme inflated property prices by enabling more spending, while advocates highlight its role in helping thousands achieve homeownership. The Home Builders Federation emphasized that the policy “was a major factor in the doubling of housing supply” after its launch, leading to job creation and expanded affordable housing options.

A government spokesperson stated that Help to Buy was both introduced and discontinued by the prior administration, with an ongoing evaluation. They added that while no new scheme is planned, a comprehensive mortgage guarantee program is now in place to support young families and renters.