Member Article

Regional benefits cap “will hit landlords, not layabouts”

• Property Expert: “The real problem is London’s broken housing market –the North East shouldn’t have to subsidise that“.

Proposals for benefits to be lowered for people living outside of London have been questioned by a leading property expert.

Think Tank Policy Exchange has suggested people living outside of London and the South East should have a 10% lower benefit cap than those living in and around the capital.

A report to be published later this month will call for the government’s £26,000 benefits cap to be lowered to £23,400 outside of London to reflect the lower cost of living – saving the government an estimated £100m a year.

Policy Exchange spokesperson Steve Hughes, has said: “Income levels and housing costs vary widely across the UK. Policymakers have been looking for ways that this can be recognised within the welfare system.”

The cap includes housing benefits, as well as child benefit and universal credit.

The government’s latest figures suggest the benefit’s cap – introduced last year – has reduced welfare spending by just 0.08%

Ajay Jagota of North East-based sales and lettings business KIS questions the proposal.

The firm, which operates from branches in Sunderland, South Shields, North Shields and Welwyn was the first letting agent in the UK to abolish deposits, replacing them with a one-of-a-kind insurance policy.

Having been named Letting Agent of the Year at the 2013 Landlord and Letting Awards, the company this year expanded into residential sales.

Ajay said: “If you’re going to bring regionalise benefits, you’re going to have to regionalise taxes too. You can’t just pick and choose what government decisions are based on local living costs and which aren’t.

“As superficially attractive as this policy sounds, my fear is it won’t save a penny, it will just push costs elsewhere. When tenants run up rent arrears as their incomes fall it’s their landlords who will pay the price. It could end up with a postcode lottery which hurts landlords, not layabouts.

“If this really was a problem, wouldn’t the streets of the North East be awash with southern jobseekers, migrating North for an easier life? It’s certainly not something I’ve seen much evidence of.

“The real problem in need of tackling is London’s broken housing market, where there are too many people and not enough housess. The North East shouldn’t have to subisise that, especially when you’re actively making it less appealing for people to move to other parts of the country.”

This was posted in Bdaily's Members' News section by Ajay Jagota .