The government’s flagship, multibillion pound scheme for helping people to buy a home is increasingly giving taxpayer funded loans to higher earners, The Independent can reveal.
The Help to Buy initiative was designed to help cash-strapped buyers, but analysis reveals the average salary of people receiving equity loans has shot up since it was introduced.
Official government data reveals the average household income of people benefiting from the £8.3bn scheme is continuing to rise, and now stands at just under £50,000.
In London, the figure is even higher, with the average recipient of a Help to Buy loan having a household income of almost £72,000.
The finding is likely to raise fresh questions about the value of the policy, which has already been criticised over suggestions it has driven up house prices and failed to benefit those who most need help.
The scheme, which sees billions of pounds of taxpayers’ money handed out each year, gives buyers cash loans that enable them to purchase a property with just a 5 per cent deposit.
The earnings of the average Help to Buy loan recipient are now almost £10,000 higher than when the scheme was introduced in 2013 – a rise of 35 per cent. In the same period wages have increased by just 6 per cent, suggesting the scheme is increasingly helping only those with higher incomes.
The average household income in the UK is £25,700, although this is after direct taxes have been deducted, whereas the Help to Buy data relates to pre-tax wages.
Last year £2.9bn of loans were paid out – a jump from £2.1bn the year before. Despite criticism of where the money is going, Theresa May has promised a further £10bn of investment in the scheme – enough to help fund more than 400,000 new homes.
Labour said the figures were proof that Help to Buy is not helping those who most need support with housing costs.
John Healey, the party’s shadow housing secretary, said: “With the number of younger people who own a first home in free fall, government ministers need to be doing much more to help people on ordinary incomes buy a first home of their own.
“Deep cuts to housing investment mean that the number of new low-cost homes to buy like shared ownership have halved since 2010, and badly targeted schemes like Help to Buy aren’t focused on those who most need a hand up.
“Labour would refocus Help to Buy to help first-time buyers on ordinary incomes.”
It comes after the Resolution Foundation suggested Help to Buy should be scrapped, saying it drives up house prices and takes money away from other areas of housing.
The average new build property now costs £50,000 more than when the scheme was introduced in 2013, it said.
The think tank said in a report: “HTB appears to have served a useful purpose when it was first introduced – restoring confidence to developers and promoting a pickup in house building. But its effect looks increasingly distortionary, suggesting that it may be time to phase it out.”
It added: “Since early 2016 the growth in new-build prices has outpaced price growth for existing resold property, strongly suggesting that equity loans have enabled developers to set prices at higher levels than otherwise.”
In the meantime, it said, a household income cap should be introduced on Help to Buy loans to ensure public money is benefiting people on low and middle incomes.
Official data reveals that the scheme, designed to help aspiring homeowners get on the housing ladder, also continues to directly benefit thousands of people who already own a property.
Almost one in five Help to Buy beneficiaries are already homeowners, and on average these recipients are wealthier than first-time buyers, with an income £8,500 higher.
The Independent has previously revealed how millions of pounds of public funds are being loaned to people with an income of more than £100,000.
The latest figures reveal that more than 6,200 households with an income of more than £100,000 have benefited from taxpayer-funded loans.
A spokesperson for the Department for Housing, Communities and Local Government said: “Our Help to Buy scheme has assisted over 440,000 people buy a home of their own since 2010, with a majority of households having an income of £50,000 or less.
“Help to Buy is getting people onto the housing ladder and last year we saw the highest number of first time buyers in over a decade.”
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