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The UK’s flagship policy for helping people on to the property ladder disproportionately benefited higher earners and did little to increase affordability for those on lower incomes, a report by the Institute for Fiscal Studies think-tank has found.
Help to Buy was launched in 2013 by George Osborne, then the Conservative chancellor, offering state-backed equity loans for new-build purchases and a mortgage guarantee scheme for lenders.
The scheme reduced the amount that individuals had to put down as a deposit when buying property. However, the IFS found that in the 2010s homebuyers were mainly constrained by their level of income, not by the maximum deposit they could raise.
As a result, Help to Buy’s primary beneficiaries were higher earners living in cheap areas, who would have been able to save for a deposit anyway.
The report, published on Wednesday, said the scheme probably “accelerated their first home purchase by a few years rather than making the difference between becoming a homeowner or not in the longer term”.
In contrast, a homebuyer with an income of £30,000 and a £10,000 deposit would still have only been able to afford a property of £145,000 even with the mortgage guarantee. Reducing the amount that lower-income individuals must put down as a deposit is not helpful in increasing what they can afford, as it does not allow them to borrow more than they otherwise could.
Bee Boileau, a research economist at IFS, said: “We find that higher-income households saw larger affordability gains under the schemes, in particular.”
“If policymakers wanted to boost affordability for those with lower incomes, they could offer more generous subsidies to this group,” she added, although she noted that such policies could raise the exposure of governments and potential borrowers to any downturn in the housing market.
In 2022, a House of Lords report found that Help to Buy had pushed up house prices in England and that its £29bn cost failed to “provide good value for money” for the taxpayer.
The IFS study said policies that do not increase the overall supply of homes could improve “affordability for some people, while potentially increasing prices for others”. The report did not examine Help to Buy’s potential effects on housing prices or supply.
The study also examined the policy’s impacts on housing affordability by region.
“Geography is crucial in determining housing affordability,” Boileau said. “We find that in London and the South East in particular, the Help to Buy schemes increased the maximum price people could afford by more than in other regions.”
The Help to Buy equity loan scheme closed in March 2023, and the mortgage guarantee was made permanent in 2025.
