THE PROPERTY FILTER TAKE
IFS research confirms Help to Buy schemes, at their 2014-15 peak, supported around 1 in 5 first-time buyer purchases but delivered the largest affordability gains to higher-income households.
From a portfolio perspective, this matters: policy designed to broaden homeownership largely brought forward purchases for those already close to buying, which means demand-side subsidies have historically fed into price inflation rather than expanding the buyer pool at the lower end.
You may wish to review how any future Help to Buy-style schemes affect new-build pricing in your target markets - speaking to your broker about stress-tested entry costs on new-build stock is a sensible first step.
Government-backed schemes rarely deliver what the headline promises. The Institute for Fiscal Studies has confirmed what many investors suspected: the Help to Buy affordability gains were heavily concentrated among higher-income households, with limited impact on those the policy was supposedly designed to help.
What the IFS Actually Found
The IFS examined the two schemes launched in 2013: the mortgage guarantee scheme, which widened access to high loan-to-value mortgages, and the equity loan scheme, which offered buyers of new-build homes a government-backed loan worth up to 20% of the purchase price.
At their peak in 2014-15, the schemes supported around 1 in 5 first-time buyer purchases. That is a significant share of the market. But the headline figure obscures a more uncomfortable finding. In the early 2010s, most prospective buyers were constrained by income limits on borrowing rather than deposit size. The mortgage guarantee scheme targeted deposit constraints, so its effect on affordability was limited. The equity loan scheme had a more noticeable impact, but still a restricted one.
Overall, Help to Buy made only a modest difference to the range of homes buyers could actually afford.
Who Benefited, and Where
The affordability gains that did exist landed with higher earners. The schemes were more likely to bring forward a purchase by a few years than to enable market access for someone who could not otherwise buy at all.
Regional patterns are worth noting from a portfolio perspective. Buyers in London and the South East saw larger increases in the price they could afford to pay. However, they saw smaller improvements in the proportion of homes within their reach, compared with buyers in lower-cost areas. That is the leverage play working in reverse: higher absolute prices mean subsidies stretch less far in real terms.
The equity loan scheme applied only to new-build properties, which make up a relatively small share of total housing stock. That structural constraint limited the scheme's reach from the outset. If you hold new-build assets in your portfolio, it is worth understanding how the removal of such schemes affects the pool of buyers for that stock. Running the numbers through a stress test calculator will give you a clearer picture of your exposure.
What Policymakers Could Have Done Differently
Bee Boileau, research economist at the IFS and co-author of the briefing, said: "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. If policymakers wanted to boost affordability for those with lower incomes, they could offer more generous subsidies to this group."
She added that this would involve a difficult trade-off. More targeted subsidies could improve social mobility, but they could also increase house price inflation and government expenditure in a way that may not prove cost-effective.
The IFS found no clear evidence that the schemes either improved social mobility or entrenched existing inequalities in homeownership linked to parental background. For those tracking mortgage and finance strategy, that is a signal that demand-side subsidies are a blunt instrument. They move prices. They do not reliably move outcomes.
If any successor scheme is announced, consider using the stamp duty calculator alongside affordability modelling before adjusting your acquisition strategy. The free resources hub has additional tools worth running through before you commit.
Key Takeaways
At peak in 2014-15, Help to Buy supported approximately 1 in 5 first-time buyer purchases in the UK.
The equity loan scheme (up to 20% of purchase price) had a more noticeable affordability impact than the mortgage guarantee scheme, but both were limited.
Affordability gains were concentrated among higher-income households; schemes more often brought purchases forward by a few years rather than enabling first-time access.
London and the South East saw larger price-affordability gains but smaller improvements in the proportion of homes within reach.
The equity loan scheme's restriction to new-build properties limited its reach across the broader housing stock.
Frequently Asked Questions
What were the two Help to Buy schemes launched in 2013? The mortgage guarantee scheme increased availability of high loan-to-value mortgages, while the equity loan scheme offered buyers of new-build homes a government-backed loan of up to 20% of the purchase price.
Did Help to Buy help lower-income households get onto the property ladder? According to the IFS, the schemes had limited impact on affordability for lower-income households. The gains were concentrated among higher earners, with the schemes more likely to accelerate a purchase than to enable one that would otherwise not have happened.
Why was the equity loan scheme's impact limited? It applied only to new-build properties, which represent a relatively small share of total housing stock, and most prospective buyers in the early 2010s were constrained by income limits rather than deposit size.
Government-backed schemes rarely deliver what the headline promises. The Institute for Fiscal Studies has confirmed what many investors suspected: the Help to Buy affordability gains were heavily concentrated among higher-income households, with limited impact on those the policy was supposedly designed to help.
What the IFS Actually Found
The IFS examined the two schemes launched in 2013: the mortgage guarantee scheme, which widened access to high loan-to-value mortgages, and the equity loan scheme, which offered buyers of new-build homes a government-backed loan worth up to 20% of the purchase price.
At their peak in 2014-15, the schemes supported around 1 in 5 first-time buyer purchases. That is a significant share of the market. But the headline figure obscures a more uncomfortable finding. In the early 2010s, most prospective buyers were constrained by income limits on borrowing rather than deposit size. The mortgage guarantee scheme targeted deposit constraints, so its effect on affordability was limited. The equity loan scheme had a more noticeable impact, but still a restricted one.
Overall, Help to Buy made only a modest difference to the range of homes buyers could actually afford.
Who Benefited, and Where
The affordability gains that did exist landed with higher earners. The schemes were more likely to bring forward a purchase by a few years than to enable market access for someone who could not otherwise buy at all.
Regional patterns are worth noting from a portfolio perspective. Buyers in London and the South East saw larger increases in the price they could afford to pay. However, they saw smaller improvements in the proportion of homes within their reach, compared with buyers in lower-cost areas. That is the leverage play working in reverse: higher absolute prices mean subsidies stretch less far in real terms.
The equity loan scheme applied only to new-build properties, which make up a relatively small share of total housing stock. That structural constraint limited the scheme's reach from the outset. If you hold new-build assets in your portfolio, it is worth understanding how the removal of such schemes affects the pool of buyers for that stock. Running the numbers through a stress test calculator will give you a clearer picture of your exposure.
What Policymakers Could Have Done Differently
Bee Boileau, research economist at the IFS and co-author of the briefing, said: "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. If policymakers wanted to boost affordability for those with lower incomes, they could offer more generous subsidies to this group."
She added that this would involve a difficult trade-off. More targeted subsidies could improve social mobility, but they could also increase house price inflation and government expenditure in a way that may not prove cost-effective.
The IFS found no clear evidence that the schemes either improved social mobility or entrenched existing inequalities in homeownership linked to parental background. For those tracking mortgage and finance strategy, that is a signal that demand-side subsidies are a blunt instrument. They move prices. They do not reliably move outcomes.
If any successor scheme is announced, consider using the stamp duty calculator alongside affordability modelling before adjusting your acquisition strategy. The free resources hub has additional tools worth running through before you commit.
Key Takeaways
At peak in 2014-15, Help to Buy supported approximately 1 in 5 first-time buyer purchases in the UK.
The equity loan scheme (up to 20% of purchase price) had a more noticeable affordability impact than the mortgage guarantee scheme, but both were limited.
Affordability gains were concentrated among higher-income households; schemes more often brought purchases forward by a few years rather than enabling first-time access.
London and the South East saw larger price-affordability gains but smaller improvements in the proportion of homes within reach.
The equity loan scheme's restriction to new-build properties limited its reach across the broader housing stock.
Frequently Asked Questions
What were the two Help to Buy schemes launched in 2013? The mortgage guarantee scheme increased availability of high loan-to-value mortgages, while the equity loan scheme offered buyers of new-build homes a government-backed loan of up to 20% of the purchase price.
Did Help to Buy help lower-income households get onto the property ladder? According to the IFS, the schemes had limited impact on affordability for lower-income households. The gains were concentrated among higher earners, with the schemes more likely to accelerate a purchase than to enable one that would otherwise not have happened.
Why was the equity loan scheme's impact limited? It applied only to new-build properties, which represent a relatively small share of total housing stock, and most prospective buyers in the early 2010s were constrained by income limits rather than deposit size.
