A combination of higher mortgage rates and stealth tax hikes are set to unleash a “bombshell” on London and the south east, new research suggests.
Rising interest rates have left mortgage holders battling to keep up with new, higher rates.
Some 3.5m households in England and Wales remortgaged their homes in the last year, amounting to a whopping £8.8bn in extra loan payments.
Commuter belt areas in outer London and the southeast home counties – a core section of the Tories’ Blue Wall voter base – have been worst hit by soaring property costs, according to Lib Dem analysis of the House of Commons Library data.
Homeowners in Buckinghamshire faced the largest increase, at £146m across some 38,000 households; followed by £132m in Wandsworth, £115m in Barnet and £102m in Bromley.
Those with homes in Kensington and Chelsea, Islington and Hammersmith and Fulham amongst a host of other London boroughs were hit hardest on an individual basis, with monthly payments spiking by more than £700 for those that refinanced.
Chancellor Jeremy Hunt saw 8,706 homes in his own local authority, Waverley, face £34m in extra mortgage costs.
While ex-minister Dominic Raab saw Elmbridge, in his Surrey constituency of Esher and Walton, among the worst hit proportionally, with 18.5 per cent of homes sharing a £56m rise.
Sarah Olney, Liberal Democrat MP for Richmond Park, said: “Rishi Sunak’s boasts will ring hollow for the thousands of families seeing their mortgage go up by eye-watering amounts.
“This Conservative government crashed the economy and now they are condemning families to a £9bn mortgage bombshell.”
The Lib Dem Treasury spokeswoman warned: “Across the Blue Wall, former Conservatives fed up with being taken for granted are switching to the Liberal Democrats.
“Rather than clinging on in Downing Street, Rishi Sunak needs to let voters deliver their verdict on his out-of-touch government by calling a general election.”
Fiscal drag ‘stealth tax’ to hit London hardest, adding to mortgage rate pain
It comes after the Lib Dems also claimed Hunt “owes an apology” to the 6.5m people set to enter a higher tax band by 2027-28 following measures in successive Tory budgets.
Olney said: “The Conservative party is trying to take the British public for fools with this shameless attempt to erase Liz Truss’s botched budget and their unfair tax hikes.
“Voters across the country and in his marginal Surrey constituency will see right through this.”
The data, from the Office for Budget Responsibility (OBR), includes some 15,000 people in Hunt’s own seat, the Lib Dems said.
Seb Maley, CEO of tax insurance provider, Qdos, told City A.M.: “A lot has been made about the tax cuts introduced recently by the government – the reduction in national insurance in particular. But the fact of the matter is that having frozen income tax thresholds, millions of people are being dragged into higher tax thresholds, meaning they are ultimately worse off.”
And he said the story was similar for the self-employed, with many paying more tax overall via fiscal drag – frozen thresholds – despite “headline-grabbing cuts to national insurance”.
Bim Afolami, economic secretary to the Treasury, hit back, saying: “This is another reheated press release from the Liberal Democrats which contains absolutely no plan for the country.
“Just like the Labour Party, the Liberal Democrats continue to snipe from the sidelines without offering a plan because they simply don’t have one.”
He added: “A vote for the Liberal Democrats is a vote for Sir Keir Starmer in government, who would increase taxes on working families by £2,094, taking families back to square one.
“Rishi Sunak and the Conservatives are sticking to the plan which is working to strengthen the economy – with inflation down from 11.1 per cent to 3.2 per cent and £900 back in hard-working people’s pockets and get mortgage rates down.”
