State backing for home ownership ‘helps better-off rather than lower paid’
The Social Mobility Commission warned the housing market is fuelling inequality.
State support to boost home ownership is helping the better-off buy bigger homes instead of getting lower paid workers on to the housing ladder, a study has found.
Low-cost home ownership schemes are beyond the reach of almost all families on average earnings, according to the Social Mobility Commission.
It warns the housing market is fuelling inequality and calls for the Government to take radical action, including curbing subsidies for buyers whose parents can help them financially.
Around three in five first-time buyers used Help To Buy support to buy a more expensive property or one in a better area than they planned originally, the research found.
Commission chairman Alan Milburn said: “This research provides new evidence that the UK housing market is exacerbating inequality and impeding social mobility,” he said.
“While it is welcome that the Government is acting to help young people get on the housing ladder, current schemes are doing far too little to help those on low incomes to become home owners. 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. ”
The Commission called on the Government to aim more support at low income buyers, including through targeted subsidies.
It said support should be restricted for first time buyers who have “unfettered access” to alternative sources of finance, such as capital from their family.
Help To Buy offers a range of support for potential buyers, including loans guaranteed by the state for up to 20% of a property’s value – or 40% in London.
The Commission found the average income for house buyers benefiting from support was £41,323 while less than half of all working age households earn more than £30,000.
Just one in five Help To Buy equity loan completions were for properties worth less than £150,000, the study carried out by LSE researchers found.
It comes after previous research by the Commission found 34% of first time buyers in England rely on their family to help them get on the housing ladder and one in 10 use an inheritance.
Since 1990, the proportion of people aged 25-29 buying a home has fallen by more than half since 1990, down from 63% to 31%.
Report author Bert Provan said: “Most research on low-lost home ownership schemes has focused on the age profile of first time buyers and impact on supply.
“This research looks at whether they open up home ownership to different and more diverse groups of low income households in the UK.
“It finds that while there are some positive effects of such schemes – such as increasing supply – the impact on improving social mobility is small.”