Applying Ethical Theories to the UK Housing Market: An Analysis

This report provides a comprehensive analysis of the UK housing market, examining its current state, the role of government, and the ethical considerations involved. It begins by outlining the issues within the UK housing market, such as high rents and unaffordable housing, and then explores government interventions, including various schemes designed to increase homeownership. The report delves into the historical context of the housing market, tracing its evolution and the impact of government policies. It critically assesses the perspectives of those who advocate for more government intervention versus those who prefer a free market approach. The analysis incorporates ethical theories, corporate social responsibility, and the concept of the free market to evaluate the effectiveness and ethical implications of government policies. The report concludes with a critical assessment of the statement "The Housing Market cannot be left to the market" and offers insights into the future of the UK housing market.

Running head: APPLYING ETHICAL THEORIES TO BUSINESS
Applying Ethical Theories to Business
Name of the Student:
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Table of Contents

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Introduction.................................................................................................................................................2
The UK housing market and the role of the Government........................................................................2
Ways to deal with the issue introduced above........................................................................................2
UK Housing Market......................................................................................................................................3
Detailed overview of the housing market in UK......................................................................................3
Role of government in the way the housing market has developed and the corresponding criticisms...4
Perspective of those who want more intervention and those who do not want government
intervention.............................................................................................................................................6
The Role of Government.............................................................................................................................7
Theories and Concepts............................................................................................................................7
CSR and housing in UK: Assessment of the role of the government........................................................8
‘The Housing Market cannot be left to the market’: Critical assessment of this statement........................9
Conclusion...................................................................................................................................................9
References ……………………………………………………………………………………………………………………………………………11

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Introduction
The UK housing market and the role of the Government
It is found that the house market in Britain is in a dismayed state. The rents of housing in
Britain are quite high and are unaffordable for large majority of people. It has been found that as
of 2017, the rates of housing in UK has been at an average rate of £226,071 which in turn
indicates an increase in the rates of housing is occurring at a rate of 5.1% on an annual basis
(Ons.gov.uk. 2018). There has been a disjuncture between the supply and demand of the
government’s assistance to purchase new homes. Moreover, various affordable home ownership
schemes are being formulated and implemented by the government of UK which is causing in
the increase in the demand for housing. These schemes include shared ownership, low interest
loans and Help to Buy ISA wherein the government is helping to increase the amount of savings
by 25% (GOV.UK. 2018). In London, people who are positioned in the lowest rung of the
economy have been worst hit.
Ways to deal with the issue introduced above
The report critically examines the condition of housing market in UK and the changing
trend of the market economy that has its impact on housing. The next section of the report
examines the role of the government in alleviating the conditions of its citizens and the
corresponding criticisms that emerged in that context. This is followed by an invigorating
discussion on the different perspectives of people who want more government intervention and
those who are opposed to the idea of government intervention. This discussion will be done
through the framework of the Libertarian perspective, argument pertaining to the free market,

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corporate social responsibility and finally an examination of the statement that the housing
market cannot be left to the market in the backdrop of United Kingdom.
UK Housing Market
Detailed overview of the housing market in UK
Since the 1900, the housing system in the United Kingdom has experienced a tectonic
shift and there has been many repercussions regarding the same on other markets and the
economy as a whole. The earlier model of housing system was characterized by the monopoly of
the landlords (Collinson 2018). However, such monopolized system faced resistance from the
new wave of houses that was constructed under the public housing structure and also the various
schemes that propelled the increase in demand of the housing market. The local authorities
provided such kinds of housing prior to the epoch of home ownership in the interwar period and
the period postwar. Over the past few decades, there has been a transformation in the tenure
patterns in UK. Even though the demand for housing has increased, the ever increasing prices
coupled with stagnating prices of home ownership has led to an increase in the amount of renting
in the UK. This is true especially of the young generation residing in UK. The house renting
scenario is such that it is being reported that about a total of 5 million households are currently
availing privately rented housing options (21%) and this number is expected to increase to 5.79
million making the percentage go up to 24% in the coming five years (Kollewe 2018). Concerted
efforts were made for the resurgence of the housing sector through private ownership of houses
but there was not much change. It was only during the mid-1990s that the private sector
witnessed a much needed revival (Gov.uk. 2018). However, the amount of investment in the real
estate market by the real estate companies has increased by 66% as of the current year. The
expansion of housing demand was also propelled by pension funds brought into existence by the

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collaborative effort of the real estate firms and the government of UK. Thus, the combined
effects of the investments and the economic policies in place like the pension funds as well as the
schemes introduced by the government ruled out the effect of increased renting, even though
both increased substantially.
Role of government in the way the housing market has developed and the corresponding
criticisms
The government in UK has been proactive in providing patronage for the construction of
homes. As mentioned earlier the government has taken steps to promote the increase in the
amount of affordable housing through the schemes of increased savings and lowering the interest
rates for the buyers. Further, it has also launched and introduced a specific and differentiated
housing agency that provides housing options to citizens at affordable prices. One such example
is Homes England which was introduced in January 2018 to occupy lands which are empty and
people would prefer to live and also find out means for catering to the needs by innovative and
enhanced, cost effective methods (GOV.UK. 2018). Even though the priorities of expanding the
housing market in UK by the government still persists, the new focus is to increase the positive
impact and returns of the housing market on the overall economy of UK. It has been reported
that due to the increase in the supply and affordability of the housing market in UK, consumers
are instigated to spend more which automatically provides the drift for higher spending and thus
higher amounts of economic growth.
Sajid Javid, the communities secretary opine that the price of average houses and rents in
UK have escalated to 7.5 times than the average incomes and rents (Savage, 2018). He criticized
this on the low rates of house building. The number of houses in England has been relatively low
than the other parts in Europe compared to the population in other parts of the world for the last

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three decades. He was of the view that there needs to be a rise in the house buildings to 225000
to 275000 units every year in comparison to 190, 000 houses constructed during the year 2016
(Guardian 2017). He portends that the housing market in UK has broken and there is the urgency
to build more homes during the right time (Aalbers 2016). He has warned that the local councils
will be compelled to publish projections for the building of local houses whereas the developers
will be compelled to utilize or lose control on planning permission that was granted to them,
tenants will be provided protection and the older people will be provided incentives that would
motivate them to shift to underused houses.
In the context of government taking up initiatives to build houses and provide them at low
cost and affordable rates to the citizens, it is very important to discuss few of the schemes
provided by the government which are enlisted and discussed as follows:
 The government provides the option of equity wherein the consumer can borrow up to
20% of the total amount needed t buy a new home in UK (Ownyourhome.gov.uk. 2018).
 The second most important scheme introduced by the UK government for first time
buyers is the “Help to Buy: ISA Scheme” under which the buyers are helped in saving up
to an amount of £200 which in turn will increase the amount of savings by a minimum of
25% and thus help the citizens in owning homes easily (Ownyourhome.gov.uk. 2018).
 In the case of council tenants in England the price of homes is reduced by an amount of
£78,600 in order to make the prices lower for this section of the population
(Ownyourhome.gov.uk. 2018).
 The scheme of Shared Ownership in turn helps to increase the affordability of homes in
England and UK by helping the buyers to take loans for a part of the ownership and
allowing them to stay on rent for the rest of the part (Ownyourhome.gov.uk. 2018).

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 The other very interesting and recently framed schemes for housing in UK is Starter
Homes scheme which will provide the buyers with a discount of 20% on registration for
loans (Ownyourhome.gov.uk. 2018).
 The last scheme mentioned herein is the Right to Acquire scheme which allows the
tenants who live on the basis of rent to acquire the houses with a discount of around
£9,000 and £16,000 (Ownyourhome.gov.uk. 2018).
In spite of all of these initiatives proposed and taken up and also promised by the
government, most of these plans and initiatives have not been worked upon and especially the
plans of the Starter Home Scheme have miserably failed and none of the plans have worked the
way they were anticipated to (The Independent 2018). Further the availability of land was not
taken completely into account while framing these schemes.
Perspective of those who want more intervention and those who do not want government
intervention
The view of the policy framers is very important in this context who claims that the
process of framing and implementing schemes especially for the youth is futile. The assertion in
this context is that, the housing prices are increased at levels that compensate for the discounts
being offered and provided to the tenants or the potential buyers (Ft.com. 2018). Thus, the
consumers end up paying the amount that they originally have to pay or even more. Thus, the
suppliers are benefitted way more along with the government rather than the consumers. Hence
more intervention is inevitably being demanded by the suppliers as compared to the consumers.

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In fact, the Social Mobility Commission, has suggested that the plans and schemes of
housing introduced by the government are innovative and authentic in the ideas behind them but
the execution is very poor. Reports claim that on initiation of the Help to Buy schemes, only 43
more houses were built in comparison to the number of houses that would be built in the absence
of the scheme (Fraser 2018).
The Role of Government
Theories and Concepts
Adam Smith propounded the concept of the free market. According to this concept, free
market can be understood as the new emerging economy. It was argued that in a free market the
invisible hand of the market forces would secure the most level of production, distribution and
consumption of commodities. One key feature of the new economy is that its productive side.
According to him, the economic productivity in new economy is generated, motivated and
sustained by the self-interest. Smith makes an economic, a sociological and a historical
observation of the economy of free market. The economic observation pertaining to this kind of
economy, the division of labor intensifies the need for exchange. On the sociological front, the
observation is that the free market will enhance the living standards of everyone in the society.
The historical observation made by smith is that although a peasant might not be economically
secure to their middle-class counterparts yet their position is believed to better than the feudal
structure of economy. The demand side aspect of the free market is that within the context of the
contractual exchange the idea of barter system is embedded (Hodkinson and Robbins 2013). This
bartering is indispensable for the sustenance of the free market. The survival of the free market is
contingent on the principles of two new social ethics. There needs to be a departure of the

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Christian philosophy that endorses the values of love and friendship. The new social ethic should
be the idea of individualism and driven by self-interest those are non-Christian values. The
Libertarian movement is based on the principle that if the private charities like the self-help
groups and the aid societies would be effective in transforming the lives of the poor. British
economist Maynard Keynes was of the view that state intervention is imperative given the
uncertain nature of the free market economy as envisaged by Adam Smith.
Another libertarian principle propounded by John Lock is that it is the right of the
government to protect the natural rights of the citizens. He pioneered the laissez-faire philosophy
and was of the view that there should be free market unrestricted by the government intervention.
CSR and housing in UK: Assessment of the role of the government
The context of Corporate Social Responsibility is very important when it comes to
assessing the role of governments with respect to a particular sector, that is the benefits and
utilities accrued to the society and community in the context of that sector. The concepts that
should be looked into by the government include greater social inclusion, social development
and sustainability. The UK government has exhibited an invigorated approach towards the
provision of housing supply as decided by the newly elected Secretary of State for Housing,
Communities and Local Government. The government is motivated to build homes for the
homeless. Brian Berry, the chief executive of the Federation of Masters Builders has supported
the move, arguing that it is an inclusive move by the government and underscore on the
commitment of the government to focus on creating homes for the homeless. However, the
government has received criticism from the opposition, Richard Lambert, the chief executive
officer of the National Landlords Association (NLA). He argues that the focus of the government
should be to formulate key housing strategies and the government should address the current

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crisis of housing that has swept across England. The initiatives of the governments taken up in
the form of the housing schemes itself prove that steps are increasingly being take up by the UK
government to increase the affordability of housing for the population especially belonging to the
demographics of the lower cohort of income and the youth. Even though the execution of the
plan and the repercussions of the plan are highly criticized the government is increasingly trying
to live up to the plans it has framed for the people. The government has initiated an efficient
affordable housing scheme with a funding proposal of 7.1 billion pound. This funding was
allocated to the local authorities and housing associations for affordable housing. The
government has decided to provide funding to the small-sized building firms for its expansion.
‘The Housing Market cannot be left to the market’: Critical assessment of this
statement
According to all the theories discussed herein and the scenario existing in the market, it is
evident that for the situation to better itself, the market cannot be left to itself as it will only
deteriorate than before causing an imbalance in between the existing demand and supply. The
intervention from the government even though not completely efficient is important as it is the
only tool that can remotely help better the situation by providing a solution to the market falling
apart. It is only with the help of the intervention that the housing market can recover and can
contribute substantially to the economy of UK as a whole.
Conclusion
The essay attempted to look at the condition of housing market in UK and delineate the
role of the government in its various interventions of the housing sector. Presently, the housing

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sector in UK is in a bad state as has been found in the extensive reports covered by The Guardian
and also from the literature on housing sector in UK. The government although are taking
initiatives to alleviate the housing situation for the teeming homeless population, however, it is
not sufficient. Interest groups and social stakeholders need to continuously exert pressure on the
government. The perspectives of the supporters and opponents of the government intervention in
housing needs to be kept in mind to analyse and assess the contemporary state of housing market
in UK. The Labour Party’s decision of terminating the right-to-buy policy is the need of the hour.
This would make social housing a reality and reduce the large number of homeless population in
UK.

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References
Collinson, P. (2018). House prices stabilise as number of homes on the market falls. [online] the
Guardian. Available at: https://www.theguardian.com/money/2017/aug/01/house-prices-
stabilise-as-number-of-homes-on-the-market-falls [Accessed 6 Apr. 2018].
Fraser, I. (2018). Government schemes for first-time buyers are not helping increase social
mobility. [online] The Telegraph. Available at:
https://www.telegraph.co.uk/business/2017/07/02/government-schemes-first-time-buyers-not-
helping-increase-social/ [Accessed 8 Jun. 2018].
Ft.com. (2018). Buyers beware of Britain’s absurd property trap. [online] Available at:
https://www.ft.com/content/aa1c9dfa-30ea-11e3-b478-00144feab7de [Accessed 8 Jun. 2018].
GOV.UK. (2018). Affordable home ownership schemes. [online] Available at:
https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-isa [Accessed 8 Jun.
2018].
GOV.UK. (2018). New housing agency to boost housebuilding. [online] Available at:
https://www.gov.uk/government/news/new-housing-agency-to-boost-housebuilding [Accessed 8
Jun. 2018].
Kollewe, J. (2018). Quarter of households in UK will rent privately by end of 2021, says report.
[online] the Guardian. Available at: https://www.theguardian.com/money/2017/jun/12/one-in-
four-households-in-britain-will-rent-privately-by-end-of-2021-says-report [Accessed 8 Jun.
2018].