Help to Buy mostly helped high earners, IFS says
Help to Buy Mostly Helped High Earners, IFS Says
A study by the Institute for Fiscal Studies (IFS) reveals that the UK government’s Help to Buy initiative, launched in 2013 under the Conservative administration, predominantly benefited individuals with higher incomes in regions where property costs are lower. While the program aimed to support first-time buyers without family financial backing, its impact on social mobility has been described as minimal.
Structure of the Scheme
The policy included two components: a mortgage guarantee program and an equity loan initiative. The mortgage guarantee allowed buyers to secure loans with as little as 5% deposits, while the equity loan provided a government-backed 20% contribution toward new-build property purchases. These measures were designed to make homeownership more accessible.
However, the equity loan component has since been suspended for new applicants in England and Scotland, with Wales set to end its version by September. Northern Ireland remains without a comparable scheme. The mortgage guarantee, on the other hand, is now operational across the entire UK.
Impact on Affordability
Despite its peak in 2014–15, where about 20% of first-time buyer transactions were supported by the program, the IFS found that it only marginally improved housing affordability. The report highlights that the scheme’s focus on new-build properties, which are less common in high-cost areas, limited its reach for lower-income buyers.
“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, a research economist at the IFS. The analysis suggests that higher earners gained the most from the program, as they were able to afford more expensive homes due to the scheme’s structure.
Debates Over Effectiveness
Critics argue that the program contributed to rising property prices by enabling buyers to spend more upfront. Supporters, however, claim it played a key role in increasing housing supply and creating employment 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,” stated the Home Builders Federation.
A government spokesperson emphasized that Help to Buy was introduced and phased out by the prior administration, with an ongoing evaluation. “While we have no current plans to revive the scheme, we have launched a comprehensive mortgage guarantee program to assist more young families and renters,” the spokesperson added.
