Economics for Business - Private Rental Housing

Running head: ECONOMICS FOR BUSINESS
Economics for Business
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ECONOMICS FOR BUSINESS1
EXECUTIVE SUMMARY
This paper intends to examine one of the vital sector of the UK economy private rental housing.
Thus, this paper finds out the factors based on the analysis of demand and supply that helps in
determining the cost of the private rental housing in the UK. Therefore, the price of the private
rented house depends on both demand-side and supply-side factors. Moreover, the demand for
the sector can also be influenced by the economic and governmental policies. This paper also
discusses the policies implemented by the government that can regulate the demand for the
private rental housing in the country.

ECONOMICS FOR BUSINESS2
Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
Task 2...............................................................................................................................................9
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

ECONOMICS FOR BUSINESS3
Introduction
Housing is considered as one of the largest non-financial asset class in the United
Kingdom (UK). Some important features such as amenities, rooms per person and quality of
housing ranked UK among the top half of the EU countries (Gov.uk 2020). One of the major
economies of the world UK is home to many largest cities such as Glasgow, Birmingham, Leeds,
Manchester and Liverpool. The largest financial center and capital city of the country is London.
The housing prices in the UK are relatively high along with higher living costs.
As the wages remained stagnant, the growing cost of housing may generate housing crisis
in the country. However, the prices and demand of the housing in UK varies depending on
different regions of the country. Out of total percentage, homes owned by the occupants, homes
occupied on a mortgage, private rented and social housing remained 30%, 40%, 12% and 18%
respectively (Ons.gov.uk. 2020). The stagnant wages and soaring housing cost kept the home
ownership out of reach and increased the demand for the private renting. There are several
factors that helps to determine the price of the private rental housing in the UK (Olitsky and
Cosgrove 2016). Here, the analysis on the basis of demand and supply will be helpful to
understand the price of the rented house. In addition, some economic or governmental policies
may also spike the demand for the private rental housing in the UK.
Task 1
In December 2019, the prices paid by the tenants for the private rental housing scaled up
by 1.4%, which was unchanged since November 2018. However, the industry witnessed a slow
growth in the price of the private rental housing since the beginning of 2016 (Theguardian.com
2020). Moreover, the growth was mainly lower in London during the same period. Since the end