Factors Determining Price of Private Rental Housing in the UK

Supply and demand analysis

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Identifying factors which helps in determining the price of private rental housing in the UK...1
TASK 2..........................................................................................................................................10
Identifying and evaluating governmental/economic policies that could be used to influence the
demand for private rental housing in the UK............................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Economics is a branch of knowledge which is related with the micro and macro production,
consumption and spending in a nation. The concept of business economics is based on two
pillars which are demand and supply (Pettinger, 2013). These two factors are interrelated and
impacts all other variables. The main aim of this report is to develop an understanding about
private rental housing in United Kingdom and how it is impacted by various economic
dimensions. In the present report, various factors which helps in determining the price of private
rental housing will be identified along with detailed usage of graphs. Furthermore, this report
will include economic policies which can be used to influence the demand of private rental
housing in UK.
TASK 1
Identifying factors which helps in determining the price of private rental housing in the UK
Demand and supply are the concepts which are directly related to price of a commodity.
Both of these concepts share a distinct relationship with the level of price. The law of demand
states higher the price of good is, the lower that good will be demanded. This law works when all
the other variables remain constant and there is no interference of external factors. This
relationship can be well explained using the graph of law of demand.
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(Source: Law of Demand, 2019)
From the above curve, it is evident that when demand of a good increases (from Q1 to Q2
to Q3) then the price of that commodity decreases (from P1 to P2 to P3). This implies that the
relationship between price and demand is inverse.
On the other hand, supply refers to the availability of a product which impact the price of
that specific product. The law of supply refers that higher the price of a commodity is, higher the
quantity supplied will be. This relationship is explained by below graph:
(Source: Law Of Supply, 2019)
From the above graph, it is evident that as the price of a commodity increases (P1 to P2
to P3), its supply also increases (Q1 to Q2 to Q3). The law of supply only works when all the
other factors are constant.
The above relationship of demand and supply with price of a commodity is explained with
the aim of identifying few main factors which can help in determine the price of private rental
housing in United Kingdom.
Private rental housing is an industry of United Kingdom which currently is facing issues as
people no more prefer to rent a private house in UK as the prices are continuously increasing.
This is an issue which economy of UK is currently facing, to address this issue, various factors
which can determine the price of private rental housing are population, taxation, interest rates,
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