Home news Home ownership schemes fail low earners – report

Home ownership schemes fail low earners – report


Schemes such as Help to Buy are mainly helping the better-off buy a bigger home rather than getting low income workers on to the housing ladder, a report has found.

The Social Mobility Commission reported that the housing market was “exacerbating inequality” – driven by a lack of housing supply, which has forced prices upwards because of high demand.
Its study – carried out by the London School of Economics (LSE) – found low-cost home ownership schemes were “beyond the reach” of almost all families on average earnings.
It found 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.
Among the Commission’s recommendations were for financial help to be more targeted – curbing subsidies for buyers whose parents can help them financially.
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It also called for more affordable properties to be built to help bring down prices and boost availability – building on its demand last year the Government commit to a target of three million homes being built over the next decade.
Commission chairman, the former Labour health secretary Alan Milburn, 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.”
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The Commission found the average income for house buyers benefiting from support was £41,323.
Less than half of all working age households earn more than £30,000.
It also identified an impact on younger people – with home ownership falling by more than half in the last 25 years to 31% among 25-29-year olds.
Report author Bert Provan, from the LSE, said: “Most research on low-cost 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.”

Source: Sky