The verdict is in. The Conservative Party's flagship help to buy scheme has predominantly favoured high-income earners who were already in a strong position to purchase property. According to a new analysis by the Institute for Fiscal Studies (IFS), the top 10% of earners received the most substantial financial advantage from the policy. Rather than facilitating homeownership for those in need, the scheme appears to have accelerated wealth accumulation for the already affluent, enabling them to buy homes earlier or acquire more expensive properties. This, in turn, distorted the housing market by inflating prices in certain areas and intensifying competition rather than boosting supply.
Inequality and Public Spending Cuts
The revelation that the government's flagship housing policy exacerbated housing and wealth inequalities during a period of severe public spending cuts is not merely shocking—it underscores the depth of the Conservative agenda of redistribution. Between 2011 and 2023, net spending per person on housing by councils was slashed by 35%, while expenditure on planning and development was cut by a third. Yet, funds were evidently available for this scheme.
Previous Criticisms and Structural Flaws
This study adds to a growing body of evidence indicating that help to buy fails to address the structural issues driving up housing costs. In 2022, the House of Lords built environment committee concluded that the scheme was ineffective at increasing housing supply and did not represent value for money. Instead of making the scheme permanent in 2021, the committee argued that providing funds directly to local authorities and housing associations to build homes would have been more effective.
Opportunity Cost and Alternative Investments
The government aims to recoup and eventually profit from the loans it issues, but this approach represents a lost opportunity. Help to buy tied up capital that could have been allocated to local authority planning budgets, government-led construction, or the acquisition of housing stock—all measures that would contribute to lower rents and more sustainable house prices in the long run.
Benefits of Social Housing Investment
Investing in social housing, rather than the Conservative policy of pushing people into the private rental sector, would not only assist the poorest. The construction industry also stands to gain from government building projects. A study of the Austrian housing market demonstrated that investment in social housing helps smooth out boom-and-bust cycles, sustaining construction activity when buyer confidence wanes. Meanwhile, taxpayers now subsidise the growing number of individuals forced out of social housing and into expensive private rentals through housing benefit.
The Current Version of Help to Buy
The present iteration of help to buy differs from its predecessor. The equity loan scheme has been discontinued, despite calls for its reinstatement, and the scheme is now restricted to first-time buyers (ironically, around 20% of users of George Osborne's original scheme used it to purchase additional properties). However, the absence of an upper income limit and the scheme's known role in driving inequality are compelling reasons to reassess its continuation.
Broader Housing System Reform Needed
Any such reassessment would necessitate a wider examination of whether the current housing system is fit for purpose. England experienced a net loss of 260,000 social homes between 2013 and 2023, while the private rental sector expanded rapidly from the early 2010s. As market forces push rents higher, wages have failed to keep pace. The solution is not to help the wealthiest climb the housing ladder faster, but to make housing more accessible to all.
