Brokers warn of affordability squeeze and political backlash as redistribution plan targets wealthier regions
Labour’s plan to overhaul council tax funding could leave southern homeowners facing higher bills, triggering concern among brokers about affordability and fairness.
The proposed changes, led by Deputy Prime Minister Angela Rayner, aim to redirect government grants based on population, poverty and age - a formula designed to benefit underfunded councils in the North. But critics warn the reforms would shift the burden onto London and the South East, where many councils may be forced to raise taxes or cut services.
“People are unfairly being asked to pay more for worse services,” Rayner said, noting that some homes in Hartlepool pay more council tax than luxury properties in Westminster.
Broker concern over affordability
For brokers, the knock-on effects are already top of mind.
“The proposed council tax reforms could be a real tipping point for many buyers in the South,” said Sarah Tucker, founder of The Mortgage Mum. “With the cost of living already stretched, the prospect of higher ongoing bills may force families, especially first-time buyers, to rethink where and what they can afford to buy.”
Jen Highton, a Liverpool-based adviser, said the shift could increase appeal in northern cities.
“If the proposed reforms go ahead, we may see a slight shift in buyer sentiment… But council tax is just one part of a much larger equation.”
Migration shifts and housing decisions
“We’ve done a few mortgages for people relocating from the South to the North for a better standard of living,” said Malcolm Davidson of UK Moneyman. “If you’re only commuting once or twice a week, it’s just a train from York — and you get more house for your money.”
Political pushback and fairness questioned
Richard Alton, managing director of Alton Mortgages in Berkshire, warned the policy could face serious pushback and be based on flawed assumptions.
“I would be surprised if the Southern MPs would be happy with this, as it is just another form of taxation. People can be pushed so far - but to me a good household is run by managing your income and expenses. You can’t keep spending and then take out another credit card. At some point the bond markets will want higher margins.”
“I don’t envisage it causing a huge shift in migration from the South to the North to live, but it could cause homeowners to consider moving locations locally to find a lower council tax bill area which still allows them to commute to their place of work.”
“It is making the assumption that those in the Home Counties and parts of London whose property value has increased also have greater disposable income to pay a higher council tax cost - this will not necessarily be the case… Cutting services in the South due to council tax money paid for by the southern homeowners being sent to the northern cities really would be truly unfair.”
Experts warn of regional fallout
David Phillips of the Institute for Fiscal Studies said the current funding system was overdue for reform, but the new model could hit areas like Wandsworth, Surrey and Hertfordshire hard.
“If the government goes to the maximalist side on redistribution, then it is making a trade-off… They need to be clear they are making that call.”
Buyers now weighing the full cost of living
For mortgage professionals, the broader message is clear: buyers are increasingly weighing long-term costs alongside mortgage rates and property prices.
“People used to focus on house prices and mortgage rates,” Tucker added. “Now they’re looking at the total cost of living - and that’s a big shift.”
