Higher-income households benefited most from Help to Buy, thinktank finds

IFS analysis reveals flagship mortgage scheme disproportionately aided wealthier buyers, failing to boost social mobility as intended. | Contesto: cronaca

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• Higher-income households benefited most from Help to Buy, thinktank finds

Contesto

Higher-income households were the primary beneficiaries of the Help to Buy mortgage schemes launched in 2013, according to a new analysis from the Institute for Fiscal Studies (IFS). The flagship policy, introduced by then-Chancellor George Osborne under the Conservative-Liberal Democrat coalition government, was designed to make home ownership more accessible during a period of soaring property prices. The thinktank's findings indicate the program had little measurable effect on improving social mobility, raising significant questions about the efficacy and targeting of a major housing market intervention. The Help to Buy program consisted of two separate schemes. The first was an equity loan where the government lent buyers up to 20% of a new-build property's value, interest-free for five years. The second was a mortgage guarantee, which encouraged lenders to offer 95% loan-to-value mortgages by having the government underwrite a portion of the risk. The explicit goal was to assist first-time buyers and those with smaller deposits in overcoming the substantial barrier to entry created by escalating house prices and stringent mortgage requirements following the 2008 financial crisis. Despite its populist aims, the IFS analysis concludes the policy's benefits flowed disproportionately upward. The data shows that households in the upper half of the income distribution utilized the scheme more extensively and, by virtue of purchasing more expensive homes, received larger absolute financial support through the government-backed equity loans. This outcome suggests the policy may have acted more as a subsidy for home purchases among those already closer to being able to afford them, rather than a ladder for those truly stuck at the bottom of the market. The implications of this skewed benefit are profound for housing policy and public finance. Critics have long argued that by stimulating demand without addressing the fundamental shortage of housing supply, Help to Buy contributed to further inflating house prices, particularly in the new-build sector. This creates a perverse cycle where the state subsidy is partially absorbed by higher prices, ultimately benefiting...

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Categoria: cronaca