Government homebuying schemes not supporting poorest households

Wed, 05 Jul 2017

Government homebuying schemes not supporting poorest households
The Social Mobility Commission has revealed research which suggests government housing schemes are more likely to help wealthier first-time buyers.

The research, carried out by the London School of Economics (LSE), discovered that schemes like Help to Buy were supporting those earning over the national median income.

The LSE found that nearly 60 per cent of those purchasing their first homes would have bought a property regardless of the schemes, with the schemes only enabling them to buy a better property than they had originally planned.

This research follows a government-commissioned piece of research which found the average Help-to-Buy buyers’ income was £41,323, making it around £6,000 less than other first-time buyers.

According to the latest Halifax First Time Buyer Review, the average cost of getting onto the property ladder is a record high £207,693.

The research suggests that, as fewer than half of households have incomes totalling over £30,000, Help-to-Buy is not doing enough to help first-time buyers.

The commission also suggests that the high cost of housing makes home-ownership schemes inaccessible for the majority of families; this is evidenced by the fact that only 19 per cent of Help to Buy Equity Loans have been for homes worth less than £150,000.

This means that, provided a 5 per cent deposit would be needed, this would exceed the 40 per cent limit of affordability for the majority of people.

The commission recommends that more help should be provided, including financial subsidies and more guidance for those looking to purchase a home.

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."
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