More than 5,000 home buyers with a combined household income of over £100,000 have been helped onto the housing ladder through the Help to Buy: Equity Loan scheme, raising questions about whether the support is going to those who need it most.
The government’s own data shows four per cent of completions supported by the taxpayer-funded initiative have gone to households earning more than £100,000.
Launched in 2013, Help to Buy: Equity Loan was designed to help first-time buyers onto the property ladder and boost the construction of new-build properties.
It enables people to buy a house costing up to £600,000 in England with a 5 per cent deposit, with the government providing a loan worth up to 20 per cent of property’s value, or 40 per cent in London.
According to the government’s data, 81 per cent of purchases made through the scheme have gone to first-time buyers, with the average purchase price standing at £240,530.
The income bracket with the highest number of completions (23 per cent) is the £30,001 to £40,000 category, followed closely by the £40,001 to £50,000 range (22 per cent).
But the large number of purchases made by buyers who are comparatively well off adds to criticism that the main beneficiaries of the scheme have not been those struggling to get on the housing ladder but the big housebuilders, who have seen profits soar after its introduction.
It comes after the government announced it was pumping an extra £10bn into the initiative with the aim of getting another 135,000 people on the property ladder.
The income levels of those using the scheme in London tend to significantly higher than the £49,911 figure for the rest of England, the government’s statistics show.
In the capital, the mean purchase price for properties bought through the scheme was £451,712, while the mean total household income was £69,318 for all completions.
Ruth Whitehead, principal at London-based Ruth Whitehead Associates, said she thought the Help to Buy: Equity Loan scheme was not helping the people it was originally set up to help.
She said: “The way the Help to Buy is set up at the moment is helping the already ‘haves’ to have some more, and not necessarily to help people take the first step on the ladder.
“The equity loan at the moment appears to be available to those with fairly substantial incomes who could quite possibly afford an ordinary mortgage but choose to use this system to keep costs down – which is not what it is for.
“As far as young initial purchasers are concerned, the shared ownership scheme is much more applicable to them, and that is not receiving extra assistance.
“[Under shared ownership], you buy the share you can afford to buy based on the mortgage affordability, which is a tried and tested series of calculations. It is a model that already works, and I am baffled as to why there is no more money and more opportunity put into that than the equity loan.”
simon.allin@ft.com
