It looked at 139 Ofsted “outstanding” nursery catchments in England and discovered that properties nearby can command prices 67% higher than the wider surrounding council area.
In 37% of cases, families paid large amounts to live within walking distance.
The average price increase was £77,926, a 16% increase on the wider local authority price.
This adds around £456 to monthly mortgage repayments and requires nearly an extra £17,300 of household income to pass a standard affordability check, Pepper Money said.
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According to Pepper Money’s analysis, Chelsea is the most expensive for parents buying within the ‘premium’ nursery area. Parents here pay £658,408 more than those buying elsewhere in the area.
Epsom and Ewell in Surrey came in second, with a 67% increase translating into a premium of £390,992, while Broxbourne in Hertfordshire followed closely behind with a 61% premium worth £276,294.
While it is not surprising that London boroughs feature heavily in the top ten, other areas with huge premiums outside the capital include Salford, where families pay 52% more, and Sheffield where there is a 41% rise.
Nearly one in three premium nursery catchments in the north carry a mortgage premium, according to Pepper Money, with the largest in Salford at £133,539 above the borough average.
Average premiums for the northern catchment are around £37,000, almost 40% less in monetary terms than the rest of England, but the percentage increase is almost identical. So, while northerners can expect to see insurance premiums, they are much lower than those received by their southern neighbors.
Paul Adams, Sales Director at Pepper Money, said: “Parents know that the right nursery is important, and the data confirms what many already suspected – in more than a third of premium-rated catchments, that choice comes with a reasonable price.
“An average repayment of around £78,000 translates to approximately £450 extra per month on a standard 25-year mortgage, and around £17,000 of additional household income is needed to pass a typical affordability test.
“For self-employed parents, contractors, those returning after paternity leave, or families with some historical credit fluctuations, the door can quietly close at this exact point.
“A specialist lender looks at what the household is actually living on, not just what a tick-box assessment captures – and that distinction can make the difference between ruling out a zip code and finding a way in. The most helpful first step for anyone in this situation is to have a proper conversation about affordability before writing off the watershed.”
