kis-logoProperty boss: “Housing benefits are freezing, but North East rents are already frozen.  Not only that –they have in fact fallen by 3% over the past 12 months.”

Controversial changes to housing benefits are unlikely to have as much impact on the North East as other parts of the country – that’s the analysis of one prominent property boss.

Housing charity Shelter this week claimed that 1000 tenants in privately rented Newcastle homes will left £63.40 a worse off every month by government plans to freeze housing benefit for four years from next April.

The charity predicts renters in North Tyneside will be £38 per month worse off, and Northumberland tenants will lose out to the tune of £23 per month.

Ajay Jagota of North East-based sales and lettings firm KIS, however, believes that flat and falling regional rents will limit the impact of the changes.

KIS research shows that not only are North East rents all-but unchanged since the firm began tracking them in April 2014 but have in fact fallen by 3% over the past 12 months.

Data from KIS’ monthly Housing NOW report shows that in April 2014 the typical North East home cost £562 a month to rent. Last month the figure was near-identical at £560pcm.

Figures from Homelet show North East rents to be falling even faster, slipping from £554pcm in August to £541 in September – a month-on-month fall of 2.3%.

Ajay said: “These changes are obviously not ideal for renters or landlords, but it’s clear to me that the freezing of Housing Benefit will impact less on the North East than any other part of the country.

“The reason for this is simple – housing benefits are freezing, but North East rents are already frozen.  Not only that –they have in fact fallen by 3% over the past 12 months. If rents aren’t rising, it doesn’t matter as much that benefits aren’t either

“Rents are static as there is currently enough housing supply in the North East to meet the current demand for rented homes. Unless there is an unanticipated explosion in the local population that should limit the impact of the Housing Benefit freeze.

“In the North East’s case there’s actually an argument for saying that Housing Benefit is keeping rents artificially high. Certainly when the flat rate Local Housing

Allowance system of setting Housing Benefit was replaced the former rental valuation system in 2008 we saw rents rise by something like £100 a month.

“Shelter seem to be judging North East rent rises by the standard of national ones, mistaking a microeconomic issue for a macroeconomic one if you will.”