UK government’s flagship Help to Buy housing scheme benefitting high earners
The UK government’s flagship Help to Buy housing scheme for helping people to buy a home is increasingly benefitting high earners
The UK government’s Help to Buy housing scheme for helping people to buy a home is increasingly benefiting higher earners. The government’s flagship, multibillion pound housing scheme for helping people to buy a home is increasingly giving taxpayer funded loans to higher earners.
The Help to Buy initiative was designed to help cash-strapped buyers, but official government data reveals the average household income of people benefiting from the £8.3bn scheme is continuing to rise, and now stands at just under £50,000.
In London, the figure is even higher, with the average recipient of a Help to Buy loan having a household income of almost £72,000.
The finding is likely to raise fresh questions about the value of the policy, which has already been criticised over suggestions it has driven up house prices and failed to benefit those who most need help.
The earnings of the average Help to Buy loan recipient are now almost £10,000 higher than when the scheme was introduced in 2013 – a rise of 35 per cent. In the same period wages have increased by just 6 per cent, suggesting the scheme is increasingly helping only those with higher incomes.
The average household income in the UK is £25,700, although this is after direct taxes have been deducted, whereas the Help to Buy data relates to pre-tax wages.
Labour said the figures were proof that Help to Buy is not helping those who most need support with housing costs.
The party’s shadow housing secretary, John Healey said, with the number of younger people who own a first home in free fall, government ministers need to be doing much more to help people on ordinary incomes buy a first home of their own.
Deep cuts to housing investment mean that the number of new low-cost homes to buy like shared ownership have halved since 2010, and badly targeted schemes like Help to Buy aren’t focused on those who most need a hand up.
It comes after the Resolution Foundation suggested Help to Buy should be scrapped, saying it drives up house prices and takes money away from other areas of housing.
The think tank said in a report that HTB appears to have served a useful purpose when it was first introduced – restoring confidence to developers and promoting a pickup in house building. But its effect looks increasingly distortionary, suggesting that it may be time to phase it out.
It added that since early 2016 the growth in new-build prices has outpaced price growth for existing resold property, strongly suggesting that equity loans have enabled developers to set prices at higher levels than otherwise.
In the meantime, it said, a household income cap should be introduced on Help to Buy loans to ensure public money is benefiting people on low and middle incomes.