Higher-Income Households Benefited Most From Help to Buy, Thinktank Finds

Why It Matters

The analysis shows that a flagship housing policy has reinforced existing wealth gaps, signaling that future interventions must be better targeted to assist lower‑income buyers and curb price inflation.

Key Takeaways

• Help to Buy aided higher‑income households most.
• Schemes covered homes up to £600k ($770k) and 20% of first‑time sales.
• Mortgage‑guarantee had limited impact on overall affordability.
• Loan scheme helped new‑build buyers but scope remained narrow.
• Policies showed little effect on social mobility for low‑income buyers.

Pulse Analysis

Help to Buy was introduced by the 2013 Conservative‑Lib Dem coalition as a two‑pronged effort to ease first‑time homeownership amid soaring prices. The loan component offered government‑backed deposits for new‑build homes, while the mortgage‑guarantee aimed to reduce lender risk on high‑loan‑to‑value mortgages. Both schemes applied to properties valued up to £600,000 (approximately $770,000), a ceiling intended to focus assistance on modest‑priced homes but ultimately covering a sizable slice of the market.

The IFS’s new methodology, which blends survey data with local price indices, reveals that the lion’s share of benefits accrued to higher‑income buyers—those who could likely afford a home without state aid. The mortgage‑guarantee, despite its risk‑sharing intent, produced only marginal improvements in affordability, as borrowers remained constrained by income‑based lending multiples. Conversely, the loan scheme did improve local affordability for new‑build purchases, yet its narrow eligibility limited broader impact. Crucially, the programmes accelerated purchase timing for affluent households rather than creating new pathways for low‑income families, thereby offering minimal gains in social mobility.

Policymakers face a dilemma: extending similar schemes could further inflate house prices, while redirecting aid toward lower‑income buyers would increase fiscal exposure. Labour’s 2021 revival of the mortgage‑guarantee, now permanent, underscores the political appeal of preserving 95% mortgage availability, yet the underlying equity concerns persist. Future housing strategies may need to combine supply‑side measures—such as boosting construction volumes—with finely‑targeted demand‑side support to ensure that assistance reaches those most constrained by affordability, thereby delivering genuine progress on both homeownership rates and inequality reduction.