A new report into government-backed home ownership schemes says “new action” is required to help more low-income buyers.

The independent study found that current programmes such as Help to Buy are more likely to benefit financially better-off househunters.

Around three in five first-time buyers responding to the survey said they would have bought anyway and that Help to Buy merely enabled them to buy a better property than they were originally looking for.

The report, which was carried out by researchers from the London School of Economics (LSE), found that those benefitting from schemes such as Help to Buy earn more than one and a half times the national working age median income.

The research points out that the high cost of housing means many low-cost home ownership scheme are beyond the reach of almost all families on average earnings.

Only 19% of Help to Buy Equity Loan completions to date were for homes worth less than £150,000. If households put down a 5% deposit, researchers found that this exceeded the 40% limit of affordability for a median income working age household.

It recommends new action to help more low income buyers including targeting financial subsidies on households with incomes up to one-and-a-half times median income and setting different levels for different regions.

It also calls on the government to provide more advice and guidance to households without a history of ownership to help them into ownership by managing risks and expectations.

The report also compared household incomes with house prices and ranked Liverpool as one of the areas where housing was beyond the reach of families on average earnings.

The Rt Hon Alan Milburn, chair of the Social Mobility Commission, says: “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.

“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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