Many government housing schemes are more likely to support better-off first-time buyers, the Social Mobility Commission has revealed.
Its research, which was carried out by the London School of Economics (LSE), found that low-cost homeownership schemes, such as Help to Buy, are supporting people earning more than one and a half time the national working age median income.
It found that around 60% of first-time buyers said that they would have bought a property anyway and that the schemes meant they could buy a better property, or one in a better area, than they had hoped for originally.
The research comes in the wake of previous government-commissioned research which found that the average income for Help to Buy buyers was £41,323 – around £6,000 less than other first-time buyers.
The average price first-time buyers are paying to get on to the property ladder has hit a record high of £207,693, according to the latest Halifax First Time Buyer Review.
Not meeting the needs of households
As fewer than half of all working age households have incomes over £30,000, the research suggests that Help to Buy is not meeting the needs of these households.
The commission, which assesses progress in improving social mobility in the UK, suggests that the high cost of housing means many low-cost homeownership schemes are out of the reach of families on average earnings. So far, only a fifth (19%) of Help to Buy Equity Loan completions have been for homes worth less than £150,000.
Researchers found that if households put down a 5% deposit, this would exceed the 40% limit of affordability for a median income working age household.
It recommends that there should be more help for low-income buyers including financial subsidies for households with incomes up to one-and-a-half times median income with different levels of support for different regions, as well as more guidance to householders who have never been homeowners.
‘Radical action’ is needed
The Rt Hon Alan Milburn, the commission’s chairperson, says: “The intent is good but the execution is poor. Changes to the existing schemes are needed if they are to do more to help more lower-income young people and families become owner-occupiers. Without radical action, particularly on housing supply, the aspiration that millions of ordinary people have to own their own home will be thwarted.