Should the Government Help Everyone Buy a Home, or Focus on Those Who Cannot Afford One?

The government should concentrate taxpayer-funded housing support on lower-income households rather than subsidising middle-income buyers who may already be able to purchase a property, according to Richard Dana, founder and CEO of online mortgage broker Tembo.

Speaking at an industry breakfast attended by Good Money Guide, Dana argued that while increasing homeownership was a worthwhile objective, public money should be directed towards people facing the greatest barriers to getting onto the property ladder.

His comments came in response to a journalist who questioned whether government policy should aim to make homeownership accessible to everyone or simply encourage more people to buy homes.

The journalist suggested that helping middle-income households purchase property might be a more realistic objective than trying to make homeownership affordable for the lowest earners.

Dana agreed that increasing overall homeownership was desirable, highlighting the significant long-term wealth advantages associated with owning property.

He referred to research undertaken with the University of Bristol which, he said, suggested homeowners could be approximately £200,000 better off than renters over 20 years, even excluding changes in house prices.

However, he argued that the question was not whether more people should own homes, but which households should receive financial assistance from the government.

Tembo’s First-Time Buyer Index Q3 2026 suggests the affordability divide is becoming increasingly pronounced.

The average first-time buyer is now 34 years old, compared with 31 at the beginning of the year, while the average gross household income of successful buyers has increased to £61,377.

The average deposit has also risen to approximately £46,000, with buyers purchasing properties costing an average of £273,217.

These figures suggest that homeownership is becoming increasingly concentrated among older and more financially secure households.

Dana said that while first-time buyer numbers had improved overall, the recovery was being driven primarily by more affluent buyers.

Lower-income households were continuing to struggle with rising living costs, expensive rents and an inability to accumulate sufficient savings for a deposit.

The government’s proposed Your First Home scheme is intended to address part of this problem by allowing eligible first-time buyers to purchase new-build properties with deposits as small as 2.5%.

But Tembo’s research suggests that reducing the deposit requirement may do little to help households whose main obstacle is insufficient income.

In 13 of the 17 English cities analysed, lower-income buyers would still need to borrow more than 4.5 times their annual income to purchase an average first-time buyer property under the scheme.

For median-income buyers, this problem would remain in eight of the 17 cities.

By contrast, higher-income households would face the same borrowing challenge in only four cities.

Dana argued that this demonstrated a fundamental weakness in government housing policy: schemes intended to help people struggling to buy could end up benefiting households that were already relatively close to homeownership.

He also questioned whether government subsidies could simply push up property prices, particularly when assistance was restricted to newly built homes.

Instead, he suggested the government should consider reforms that help buyers without artificially increasing demand for particular types of property.

Tembo’s report examines three alternative policies: removing the £450,000 property price cap on Lifetime ISAs, abolishing stamp duty for first-time buyers and allowing buyers to use up to £12,500 of pension savings towards a deposit.

The research found that removing the Lifetime ISA property price cap would directly benefit the average first-time buyer in just one of the 17 cities analysed.

Abolishing stamp duty would directly benefit buyers in three cities, while allowing pension savings to be used towards a deposit could help buyers in all 17 cities, although this would come at the expense of retirement savings.

Dana was particularly supportive of reforming the Lifetime ISA, arguing that it was an established product that encouraged young people to save and had already helped substantial numbers purchase their first homes.

He also suggested that increasing stamp duty relief for first-time buyers could reduce the unexpected upfront costs that frequently make purchasing a home more expensive than anticipated.

However, the broader issue remains whether government policy should prioritise increasing the overall number of homeowners or helping those who would otherwise remain permanently excluded from the property market.

Dana’s view was that these objectives need not be mutually exclusive.

Increasing homeownership would help more households build long-term wealth, but where taxpayer funding is limited, he believes support should be targeted towards those who need it most.

For policymakers, the challenge is to design housing schemes that genuinely improve affordability rather than simply making it easier for existing buyers to pay higher property prices.