Help to Buy mostly helped high earners, IFS says

Help to Buy Mostly Helped High Earners, IFS Says

Report Highlights Limited Social Mobility Impact

A major think tank has revealed that the government’s Help to Buy initiative in England largely benefited individuals with higher incomes, particularly in regions where housing costs are lower. The IFS report indicates that the program, launched in 2013 under the Conservative administration, had a “limited impact” on improving social mobility.

The scheme was designed to assist first-time buyers who couldn’t secure funds from family or friends, offering support through deposits and boosting mortgage accessibility. However, its effectiveness in making housing more affordable has been questioned, with critics arguing it contributed to rising property prices.

Policy Components and Regional Status

The IFS analysis focuses on the 2013 Help to Buy policies, which included two key elements: a mortgage guarantee program and an equity loan scheme. The mortgage guarantee allowed mortgages with as little as 5% deposits, while the equity loan provided 20% government-backed financing for new-build homes, reducing buyers’ required upfront costs.

Currently, equity loan schemes in England and Scotland are no longer accepting new applicants. In Wales, the program will cease in September, whereas Northern Ireland never had an equivalent initiative. The mortgage guarantee, however, remains active across the UK.

Findings and Criticisms

Despite its peak in 2014–15, when nearly 20% of first-time purchases in England were supported by the scheme, the IFS found it only marginally improved housing affordability. The research suggests that the program’s benefits were concentrated among those who already had the means to afford higher prices, as it primarily targeted new builds, which are less common in most areas.

According to the report, participants often relied on informal support from friends or family, limiting the scheme’s role in breaking down financial barriers. “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, an IFS research economist.

Meanwhile, proponents of the scheme argue it played a crucial role in expanding housing supply and creating jobs. The Home Builders Federation highlighted that the program was a key driver in doubling housing availability shortly after its launch, fostering growth in affordable housing through private sector collaboration.

Government Response

A spokesperson for the Department of Housing, Communities and Local Government stated that the previous administration both introduced and phased out the scheme. They emphasized that an ongoing evaluation is being conducted and mentioned a new mortgage guarantee program aimed at aiding young families and renters.

“While we have no current plans to reintroduce Help to Buy, we have launched a comprehensive mortgage guarantee scheme to open doors for more young families and hardworking renters,” the spokesperson added.