Government schemes for first-time buyers don’t help poorest

3 July 2017

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.


In reply to by anonymous_stub (not verified)

What a surprise. Mind you the average wage is a year on minimum wage - I have no idea where they get the £26,000 average wage from when most people are on way lower than that and can only dream of a £26,000 payday

In reply to by anonymous_stub (not verified)

One of the drawbacks of these schemes is it tends to push up house prices. Without such schemes prices would be held in check more.. The systems tend to help builders who can offer these schemes. It's like pouring fuel on the fire.House prices are far too high and first time buyers would be struggling without the bank of mum and dad.Housing should be directed towards social housing where the need is greatest

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