Help to Buy had ‘limited impact’ on social mobility and mainly helped higher earners, research finds

The scheme enabled people to buy a new build home with a 5% deposit, using an equity loan worth 20% of the price of a house, rising to 40% in London.

It ran from 2013 until 2023 and cost the taxpayer more than £29bn. Advocates said it helped to stimulate housebuilding, with net housing supply almost doubling from 130,610 in 2012-13 to 248,590 in 2019-20.

However, critics argued that house builders used the higher budgets of purchasers to push house prices and profits up, leaving people in overpriced homes that are difficult to sell.

Over the 10 years of the scheme, the share price of large house builders – including Persimmon, Barratt and Taylor Wimpey – nearly tripled.

House builders have said that Help to Buy enabled 325,000 households to buy a home and that this is the first time in 60 years the government has not provided support for first-time buyers.

Ms Boileau added: “Our research indicates that the Help to Buy schemes introduced in 2013 had the largest impact – in terms of making more homes affordable – on higher-income households.”

The IFS said the mortgage guarantee scheme did not make housing much more affordable because most people were constrained by how much they earned, not the cost of a deposit.

Meanwhile, the equity loan scheme made more of a difference but its impact was “muted” because it applied only to new build homes.

The new IFS research found that the more a buyer earned, the more helpful the scheme was to them.

It “increased maximum affordable prices most among those who could already afford higher prices,” the thinktank said.

For people in higher-income groups, it only “accelerated their first home purchase by a few years” because they would normally be expected to be able to save for a minimum deposit already.

The report added: “The schemes seem neither to have entrenched inequalities in housing affordability based on parental background nor to have boosted social mobility.”

The IFS said it was carrying out its research amid calls for the reintroduction of the loan scheme, but its findings appeared to echo criticisms by the National Audit Office (NAO).

In 2019, the NAO said nearly two-thirds of people who used the scheme could have bought a home without it.

Last year, Jennie Daly, chief executive of Taylor Wimpey, said the government should introduce a Help to Buy-style loan scheme to help first-time buyers.

She said an equity loan that lets first-time buyers take out a loan-to-value mortgage of 75-85% with a lower interest rate would “really start to move the first-time buyer into the market and that will have material benefits for the market as a whole”.

In 2019, the Public Accounts Committee said the scheme had “boosted the bottom line” of house builders.