Factors Affecting Prices of Private Rental Housing in the UK

PROJECT 1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1.......................................................................................................................................3
Using supply and demand analysis determine key factors in determining price of private rental
housing in UK.............................................................................................................................3
TASK 2.....................................................................................................................................10
Explaining government policies which can be used to influence the demand of private rental
housing in the UK.....................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
In the economy of nation, there is too essential that supply and demand should be balanced.
It is so because in the absence of this, there can be many financial problems. The project
report is based on key factors of economy which can affect to pricing policies of private
rental housing in the United Kingdom. These factors are mentioned by help of supply and
demand analysis. Along with, key economic policies are also mentioned that can influence
demand of private rental housing in UK.
MAIN BODY
TASK 1.
Using supply and demand analysis determine key factors in determining price of private rental
housing in UK.
In the context of economy of United Kingdom, there are different types of factors which
have a significant impact on various aspects. Before focusing on factors of economy, this is
essential to know about concept of supply and demand which is mentioned below:
Supply- Supply is a core economic term that defines the overall quantity that is accessible to
customers of a given product or service (Meaning of supply, 2020).
Demand- Demand is an economic concept that relates to the customer's desire to purchase
products and services and to pay a premium for a particular commodity or product (Meaning of
demand, 2020).
There is a critical relation between supply and demand which can be understood by laws:
Law of demand- As per the law of demand it can be stated that if price of product increases then
demands decreases (Law of demand, 2020). Such as in the aspect of UK, if prices of private
rental housing will rise then people will not focus on buying houses. On the other hand, if price
will decrease then more number of people will be willing to buy houses.

Illustration 1: Demand of private housing. 2020
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From the graph described, it is simple to calculate that if private house prices increase, such as
form P to P1, then housing demand decreases from form Q to Q1. As the law states that the price
and demand of the commodity are reversed, then the curve shifts down. Business engaged with
real estate industry thus benefits from the curve and make successful plans to raise the market for
rental houses in the UK in the short term. In fact, only price and calculation of positive effects on
demand are found in a short amount of time, although there are several other variables
influencing demand in a period of time.
Supply law- The theory of the economy refers to the idea that the demand for products primarily
modifies as shifts in the price of products and services (Law of supply, 2020). Therefore, supply
law establishes a good relationship between the quantity provided and the price, and if the
demand rises the supply of houses in the UK will rise immediately or vice versa. Builders in the
UK are rising or reducing the building as per the house price trend. The following graph provides
a better perspective on the definition of supply and demand.