Government-backed Help to Buy schemes delivered modest improvements in housing affordability, with the gains concentrated among higher-income households, according to new analysis.

Research from the Institute for Fiscal Studies (IFS) suggests that the flagship policies, introduced in 2013 to support homeownership, did little to shift affordability for most first-time buyers, despite supporting hundreds of thousands of purchases.

The study examines two key interventions: the equity loan scheme, which ran until 2023 and offered government loans of up to 20% on new-build homes, and the mortgage guarantee scheme, which enabled lenders to offer higher loan-to-value mortgages with reduced deposit requirements.

While both were designed to ease access to the housing market, the IFS concludes that their impact was shaped largely by borrowers’ incomes rather than their ability to raise a deposit.

INCOME, NOT DEPOSITS, THE MAIN BARRIER

The analysis finds that most non-homeowners in the early 2010s were constrained by loan-to-income limits rather than deposit requirements. As a result, policies that reduced the size of deposits had limited effect on what many buyers could actually afford.

For example, although the mortgage guarantee scheme reduced the minimum deposit from around 10% to 5%, this did not enable lower-income households to purchase more expensive homes, as borrowing remained capped at around 4.5 times income.

In practice, this meant affordability gains from the mortgage guarantee scheme were minimal for most households. The IFS notes that maximum affordable house prices “hardly changed” as a result of the policy.

By contrast, the equity loan scheme had a more noticeable effect, as it reduced both deposit requirements and the size of the mortgage needed. However, its impact was limited by its restriction to new-build homes, which made up a relatively small share of available properties in many areas.

GAINS CONCENTRATED AMONG HIGHER EARNERS

The distributional impact of the schemes was uneven. Higher-income households saw the greatest improvements in affordability, both in terms of the maximum property value they could purchase and the proportion of homes within reach.

The mortgage guarantee scheme was found to benefit primarily those already close to being able to buy, particularly higher earners who were more likely to be constrained by deposit requirements rather than income limits.

Similarly, the equity loan scheme increased affordability most for those already able to purchase higher-value homes, including buyers in London and the South East.

However, despite larger increases in maximum affordable prices in these regions, the share of properties within reach rose less significantly, reflecting the higher overall price levels.

GEOGRAPHY AND SUPPLY KEY FACTORS

The report highlights the importance of local housing markets in shaping affordability outcomes. Differences in house prices and the availability of new-build homes were found to account for much of the variation in affordability between households.

In areas with higher prices and constrained supply, gains from Help to Buy were more limited. The study assumes no impact from the schemes on house prices, but notes that any upward pressure on prices would likely offset some of the benefits.

The equity loan scheme, in particular, was intended to support housebuilding by boosting demand for new homes. While this may have increased supply to some extent, the IFS suggests the effect was constrained by planning restrictions across much of England.

LIMITED IMPACT ON SOCIAL MOBILITY

The analysis also finds little evidence that Help to Buy significantly altered patterns of inequality linked to family background. Differences in parental wealth or education played a relatively minor role in determining affordability gains compared with income and geography.

This suggests the schemes neither entrenched existing inequalities nor substantially improved social mobility.

Instead, the main effect appears to have been to bring forward purchases for households already likely to become homeowners. Higher-income buyers, who would typically be able to save for a deposit over time, were able to enter the market sooner.

IMPLICATIONS FOR FUTURE POLICY

With industry calls growing for a reintroduction of equity loan-style support, the findings raise questions about how future schemes should be designed.

The IFS concludes that policies focused solely on reducing deposit requirements are unlikely to have a significant impact on homeownership rates if income constraints remain binding.

More targeted support for lower-income households could broaden access to homeownership, but would involve greater risk for both borrowers and the state, particularly in the event of a housing market downturn.

Ultimately, the report suggests that improving affordability on a wider scale will depend less on demand-side interventions and more on addressing underlying supply constraints and income disparities.

While Help to Buy provided a route onto the housing ladder for many, its overall effect was modest and uneven, with the greatest benefits accruing to those already best placed to buy.