A new report from the Institute for Fiscal Studies has taken a fresh look at the Government’s Help to Buy scheme and concluded that it largely benefited higher earners rather than significantly improving social mobility.

The scheme was introduced in England in 2013 with the aim of helping first-time buyers who did not have financial support from family or friends.

It worked through two main measures:

• a mortgage guarantee scheme allowing buyers to purchase with a 5% deposit
• an equity loan scheme offering a Government-backed loan of up to 20% on new-build properties, rising to 40% in London for part of the scheme

At its peak in 2014/15, around one in five first-time buyer purchases in England were supported through Help to Buy.

What the report found

According to the IFS, the scheme made only a limited difference to overall housing affordability and had relatively little impact on social mobility.

One of the main issues highlighted was that the equity loan scheme applied only to new-build homes.

Because new-build supply is limited in many parts of the country, particularly in London and the South East, access to the scheme was uneven. Buyers in lower-cost regions were often more able to benefit, and these areas also tended to have higher average incomes relative to local house prices.

The report also noted that many buyers were already close to normal mortgage lending limits before using the scheme. In some cases, additional financial help from family was still needed at the last minute.

The wider debate

Critics of Help to Buy have long argued that the scheme may have pushed house prices higher by increasing buyers’ purchasing power without significantly increasing supply.

Supporters, including James Cleverly, continue to argue that it helped thousands of people onto the property ladder while supporting housebuilding activity.

As with many housing policies, the reality is probably somewhere in the middle.

Where the scheme stands now

The equity loan scheme has now closed to new applicants in both England and Scotland, with Wales expected to follow.

The mortgage guarantee scheme, however, remains available across the UK.

A practical view

For many people, affordability remains the biggest challenge when buying a home.

Schemes like Help to Buy can improve access in the short term, but they do not necessarily solve the wider issue of housing costs increasing faster than incomes.

The report is another reminder that borrowing capacity, deposits and affordability are all closely linked - particularly while interest rates remain relatively high.

Final thought

Help to Buy clearly supported a large number of purchases over the years, but the latest analysis suggests the long-term impact may have been more limited than originally hoped.

For anyone considering buying, moving or reviewing their finances, understanding affordability properly remains far more important than relying on support schemes alone.

If you’d like to talk through your finances or longer-term planning, feel free to get in touch.