The government has confirmed plans to impose a "mansion tax" by doubling the council tax on homes worth more than £2 million across the country.
This is a tax on family homes in London, where the average house price is almost double the national average. According to Rightmove this week, £1,900,000 will buy a large pile in Gosforth — a well-healed suburb of Newcastle — spread over nearly 6,000 sq ft.
Listed for sale in the heart of Hackney is a Victorian terraced house covering less than 2,000 sq ft for £2,000,000.
While experts predict that this new annual surcharge will depress sales on good sized family homes further in the capital – it may even lower asking prices around the £2 million – for the majority of young families it is irrelevant.
For many, the move from that first apartment into a house within their London borough is impossible as the price gulf between apartment and house continues to widen.
New research, exclusive to Homes & Property, reveals that the cost of a semi-detached house is 164 per cent more than the cost of the average flat this autumn. The smallest difference was 127 per cent in 2014.
Despite limited house price growth across all housing types over since then, the gap has grown significantly in both percentage and cash terms, from £99,600 to £283,000, according to Hamptons.
Apartment prices have been relatively flat during those years, according to Land Registry data, with values climbing 7.7 per cent.
Whereas the average price of a terraced house, for example, has risen more than threefold (22.2 per cent). Those young families trying to upsize from an apartment to a family-sized home are therefore facing a huge jump in mortgage value and mortgage repayments and cannot rely on amassing equity in their first property.
The high demand for family-sized homes versus flats, with first-time buyers struggling to meet the deposit requirements or secure a mortgage, is clear. It takes a vendor selling a flat 20 days more to find a buyer than one selling a three-bedroom home, and an extra month to get the deal to completion.
London’s most affordable family home hotspots
So, where can second steppers look to try and find pockets of affordability in London with a decent supply of family-sized homes in suitable neighbourhoods, and well below the contentious £2 million threshold? It may mean casting the net wider and moving off their patch.
Newham tops the charts for family home affordability, the Hamptons study shows.
"Newham is the cheapest place for a second stepper to move up, with the average mortgage payment rising by £626,000 per month, assuming a fairly hefty 25 per cent equity in the property," David Fell, analyst at Hamptons explains.
"It is generally in the east and southeast of London where the jump is smallest," he adds. Barking and Dagenham comes in second (with a jump of £825), followed by Tower Hamlets (£850), Havering (£1,012) and Bexley (£1,024). Croydon, Hillingdon, Greenwich, Harrow and Bromley complete the top 10.
At the other end of the ranking the largest jump between mortgage repayments per month on an apartment and on a semi-detached home is in Kensington and Chelsea, with a leap of £7,385. Westminster is second (£7,127), Camden (£5,547), Hammersmith and Fulham (£3,378) and finally Islington (£3,033).
But the numbers do not tell the fully story. These boroughs are vast and neighbourhoods vary in prices and suitability.
Young families looking to relocate across London will often prioritise affordability and schools together.
Below, Homes & Property pulls out three family friendly neighbourhoods within the top 10 cheapest boroughs for upsizers with terraced and semi-detached homes on sale from around £400,000.
Isle of Dogs, Tower Hamlets
Tower Hamlets is one of the biggest boroughs in London with a wide variety of areas and housing stock to choose from, keeping prices lower than neighbouring Hackney.
"We see a lot of second steppers, typically young families, selling their flat in Hackney, Islington or Blackheath and priced out of houses there.
“So, they upsize into Tower Hamlets," says Hamptons estate agent Adam Wolfryd.
He pinpoints the Isle of Dogs as offering value for money in a popular and family-friendly corner of London with a wide choice of OFTSED-rated 'good' primary schools and the sought-after George's Green state secondary school.
It is close to the City and Canary Wharf with old traditional Victorian houses and dockers cottages. The old dockmasters cottages are a little bigger and may go for £830,000 while the smaller terraces that can be extended tend to be priced around £650,000 to £750,000.
"The Isle of Dogs has traditionally been undervalued and has not been as fashionable as Hackney or Stoke Newington and Walthamstow," he says. And yet it is a short walk to the artisanal shops, restaurants and pubs around Victoria Park.
East Greenwich and Maze Hill, Greenwich
For families, west Greenwich and east Greenwich present the most suitable housing stock with multi-million pound houses to be found on the west side of Greenwich Park as it turns into Blackheath.
Rightmove has a £1,950,000 terraced house listed with four bedrooms on King George Street.
"West Greenwich is considered the area's most sought-after and affluent part and is home to some of London's oldest streets — such as Crooms Hill," says Dexters' Jaydene Malyszczuk.
However, east Greenwich offers better value for money. There's a neat, three-bedroom terraced house on sale on Mauritius Road for £650,000 and a four-bedroom terraced house for £775,000 by Maze Hill station.
"East Greenwich offers a more affordable alternative to the west, with an appealing mix of period properties and a strong sense of community.
“The Pelton Arms is a much-loved local pub while families are drawn to the area for its schools — Meridian Primary and Halstow Primary, both rated 'good' by Ofsted," says Malyszczuk.
Crystal Palace, Croydon
Edward Dennett, an estate agent with Wilfords, made the move to upsize from Balham in Lambeth to Crystal Palace in Croydon, attracted to "the Triangle" neighbourhood in Crystal Palace. This well-healed spot is formed of Westow Street, Westow Hill and Church Road. "
It has a brilliant, eclectic mix of places: 56 Westow for cocktails, Brown and Green for brunch and Four Hundred Rabbits for pizza nights," Dennett says.
There are antiques shops and of course a Gail's is opening next month.
For families moving into the area, the streets to live on are Belvedere Road, Fox Hill and Gintra Park, but this is "mansion tax" territory.
Better value can be found on the streets between Crystal Palace and Upper Norwood but still within walking distance of "the Triangle".
KFH is selling a four-bedroom end-of terrace house for £675,000 on Beauchamp Road while there's a three-bedroom, timber clad home by Spa Wood parkland for £600,000. Both on Rightmove.
"In Crystal Palace you do not feel like you are compromising by moving further out. You suddenly get the space to upsize and the quality of life that felt completely out of reach closer in," says Dennett.
