A new report published by the Social Mobility Commission found that the government schemes, such as Help To Buy, have had little impact on improving social mobility because better-off buyers are most likely to benefit from the extra support.
Around 3 in 5 first-time buyers said that they would have bought a home anyway, adding that Help To Buy just enabled them to buy a better property than the one they would have purchased originally.
According to the research, around 1.8 million properties have moved into ownership through Right to Buy since the 1990’s. A further 200,000 were bought through the affordable homes ownership route, and 300,000 households were helped by reduced costs of attaining ownership.
However, the research also found that the average income for those who have benefited from Help to Buy is £41,323. But fewer than half of all working age households in Britain have earnings of over £30,000 a year, meaning they are unlikely to be able to afford to get on the housing ladder even with the support of government schemes.
The report blames the high cost of housing for preventing households with average earnings from being able to afford to own their own home, with only 19% of Help to Buy Equity Loan completions valued at less than £150,000.
Home ownership among 25 to 29 year-olds has fallen by more than half over the last 25 years, from 63% in 1990 to 31% now.
The Social Mobility Commission is calling on the government to take action to help more low income buyers, including targeting support on households with incomes up to one-and-a-half times the average income.
Alan Milburn, chair of the Social Mobility Commission, said: “This research provides new evidence that the UK housing market is exacerbating inequality and impeding social mobility.
“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.”
He added: “Without radical action, particularly on housing supply, the aspiration that millions of ordinary people have to own their own home will be thwarted.”
The report’s lead author Dr Bert Provan, from the London School of Economics, added: “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.”