Determining Factors Influencing Private Rental Housing Prices in UK

This report provides a comprehensive analysis of the factors determining the price of private rental housing in the United Kingdom. It begins with an introduction that highlights the key economic principles, such as supply and demand, that influence market rents. Task 1 delves into a detailed supply and demand analysis, identifying crucial factors like population changes, taxation, interest rates, and economic growth. The report examines how these elements impact rental prices, supported by relevant data and graphs. Task 2 explores governmental policies that can influence the demand for private rental housing, including fiscal policies, privatization, and transport policies. The report concludes by summarizing the key findings and their implications for the UK rental market. This report is a valuable resource for understanding the complexities of the UK housing market.

Factors In Determining The
Price Of Rental Housing In
The UK

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Supply and demand analysis and recognise main factors to determine the price of private
rental housing in UK...................................................................................................................1
TASK 2............................................................................................................................................7
Main Governmental policies that could be used to influence the demand for private rental
housing in the UK.......................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
In present time market rents are mainly based on two factors such as local wages levels
and the balance of supply and demand. As per the study of rental housing in UK is average
which is easily get by students. For this utilise different resources which are surrounding on
people that called as economic (Harbarth and et. al, 2015). There are identified 4 factors that
impact on the economy in direct manner such as, labour, capital, land and business organisation.
To better understand these factors require to apply specific concept of micro environment that
help in supply of company to reduce any type of differences that occur at the time business
activities is known as economic of business. This report based on the different variables that
analysis the price of private rental housing in context of United Kingdom. Along with explain all
government policies that impact on the demand for private rental housing in the UK.
Additionally, present all facts, graphs and points in regard of rental housing.
TASK 1
Supply and demand analysis and recognise main factors to determine the price of private rental
housing in UK
Real estate business is defined as tangible assets in which consist of property,
construction as well as land. These assets are used for set up business and mainly focus on the
land and buildings which is available in both manner like rent as well as sales. The house
properties are categorised into different manner like housing, industries and commercial. In
present time mostly people prefer to take house on ret which is suitable and adjust in their
budget. The business of real estate is impacted on the law of supply and demand, where price of
housing are mainly based on the these factors. The demand of housing and low supply become
reason of hike in prices and fall down when demand is fulfil on time at market place. The law of
demand and supply define as basic terms of economics. Both terms of demand and supply based
on the products and services which is related with them in positive and negative manner. Such
as, when demand of particular product is enhanced so price rates also increased. While, supply of
any product is increased so price will fall.
The real estate business conduct activities in house transaction in which consist of
participation of buyers and seller. On the other side, law of demand and supply presents the
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changes in price as well as equilibrium. Therefore, due to less supply of house increase price of
house and same things tends to happen with command wars (Storey, 2016).
Demand law: It is linked with the goods & services in which willing to purchase house
in particular period of time. According to this law price and actual goods weight are always
inverse association with each other. In the context of private housing of UK the prices gets to
raise in order to demand of land get deducted vice versa.
Supply law: It is based on the economic theory in which predict production in which
states the supply of good mainly modify as per the changes in price and goods. This law defines
that supply and price both have positive relation it means when price increase so supply
automatic increase.
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Factors impact on supply and demand of housing in UK
There are discussed various kind of factors that impact on the supply and demand of
housing in UK. There are consisting of affordability, interest rate, population, economic growth
and many others. These helps to analysis price of housing in particular manner:
Population changes: It is essential factor that impact on the demand as well as on price
of rental housing. It is mainly based on the number of population who wants to take household
on rent. In UK, most of people depend on the average size of households. Thus, increment in life
expectancy, birth rate and more apply all relevant changes as per the demographic market
segment and increase the size of population. It is estimated that the population of United
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Kingdom is increased in following ten years. As a result increase demand of housing that impact
of price in increasing manner.
Taxation: This factor impact on the rental house property in which follow all the
guideline of UK government that set by them for household properties. It is variable sources that
impact on the demand of rental houses. As a landlord require to pay income tax on their house
properties which is impacting on profitability and deduct income level (Lawrence, 2018).
Interest Rate: It plays significant role in order to analysing the price of housing where
apply modification as per the interest rates and impact on the mortgage payment of interest.
Hence, this factor mainly utilised to understand the affordability of housing and analysis current
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price at the market place. Presently analysis the actual annual inflation rate is 1.7 in UK and
estimate that it will be increased by 2.2% till 2021. As a result the increasing rate impact on the
price of rental household in following year (Inflation rate in UK, 2020).
Economic growth: It is outlined as essential element that impact on the demand in regard
of purchasing or making investment on private housing based on income. When economic
growth become strong so it impact on the people income in positive manner. This would make
them capable to invest amount on rental housing. Due to continuous increasing of economic
growth so it impact on person income. As a result increase demand of household that increase
price of house properties. In the context of recession, income level goes down of people so they
can not afford it and take house on rent. Thus, these changes impact on the house price in UK
which is analysed through graph:
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Supply: When demand of housing is completed on time at the market place so price fall
down of house properties. If supply is shortage so will increase price of availability of houses.
On the other side excessive supply become reason of cut down price of household. Such as,
market activities is based on the real estate oversight (Kuttner and Shim, 2016). There are
identified different cases in regard of house properties and prices of housing will fall under:
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Free flow of migrant labour: This factor influence on the demand of private rental
houses in order to flow of migrant labour. So it will impact on the increasing demand for new
homes. Due to enhance rental cost increase individual pay in regard of rent. These are based on
the overall expenses that specify to buy a new house rather than pay rent for household. While, if
rent cost is deducted so demand for rental houses will increased and like to stay in rental houses
rather than purchase a new house. Thus, most of the organisation are dealing into construction
industry which is designing effective policies for the rental housing and maintain suitable profit.
Affordability: Due to enhance income per capita focus on those people who can afford to
purchase a new house at particular price point. The demand for purchasing family home also
enhance when the economic situation is big. Due top increase revenue impact on the price of
household. These housing prices can be determined the rises as well as prices at the same time.
In context of United Kingdom, this graph helps to understand the demand of house and
increasing in quicker manner after comparison of per capita income of customers. It means
affordability of customer is based on the houses or any commodity (Muldrew, 2016).
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Confidence: This factor is impact on the confidence of customer, mainly for longer
period of time of construction industry at the market place. When people analysis economy in
regard of property prices so prices will enhance in the future to improve capital. It will increase
business to make expenses in housing buying. Therefore, earning, estimating or trust is based on
long term activities and necessary for development of building and their cost are influenced
earlier compare than other factors.
TASK 2
Main Governmental policies that could be used to influence the demand for private rental
housing in the UK
The government policies are developed for every type of people in which focus on the
aggregate supply as well as demand of particular products. These are fluctuated as per the
changes in market and economic growth. The law of demand mainly based on the government
participation like fiscal policy in which deduct taxes rates and in monetary policy consist of
deducting the interest rates. These policy are mainly working when economy face the problem of
recession at the particular market place. While, law of supply side consist of all the free trade
contracts, deregulation and privatization, deduction in tax, improve level of education as well as
training, set up effective infrastructure and many others which is related with the improvement.
These factors are based on the long term activities in regard of economic productivity. There are
discussed different types of policies that set up by government for household properties such as:
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Fiscal policy: To analysis the demand of housing, government can deduct tax rate and
enhance more spending. In the context of lower income tax outputs to addition expendable
income and motivate purchaser to spend money on housing. With the help of government
policies government supports to business and offer many opportunities in regard off employment
and carry out stability in economic condition. Many time this policy become reason of issues and
face expansionary fiscal policy that based on the increment on government borrowings too. To
fulfil the requirement of people take some loan from the private sector. In case of increase
economy growth so private sector charge high interest rate on the borrowing of government
sector as well. As a result this policy helps to increase of private housing in broad manner (UK
fiscal policy. 2020).
Privatisation: According to this policy consist of selling state owned assets that based on
the stock market that related with the private sector. Thus, when firms are owned more profit
gain in regard of different conditions and enhance efficiency. Most of the private firms are
working for the accountable to shareholders in order to supply them for good return in regard of
their investment activities. Due to purchase state owned assets will aid them in order to
accomplish set objectives. It supports to this industry in challenging demand of private housing
in effective way. All the private sectors in case of real estate business can take finance to invest
their amount in stock that supports to increase competition among business to sell house property
with lower price with effective quality of service (Milne and Parboteeah, 2016).
Transport policy: The transportation is policy is high so demand of rental house is
decreasing because for shifting luggage required to more transportation. As a result UK people
face high fair of these activities. The UK government design typical transportation policy that
impact on rental house service demand.
Price Caps: Due to changes in housing prices based on the upward and downward
condition at the market place. Thus, it is identified particular reason of occurrence of instability
of private investments. In case of achieving all the set objectives require to set up effective
demand of UK government. For this require to make interventions as per the stability in prices.
This policy is important part of governmental policies and change according to operations in
commodities directly within open market. Such as, government keep some properties and
according to their policies sell and purchase to local citizen with reason of set up supply with
demand. If the price of house property is fall down that time people ignore to purchase these
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properties by forecasting that may impact in future and suffer by loss. Thus, government
requirement based on the rate of properties and assure people in regard of achieve all advantages
through investment in private housing. As a result it supports to stimulate the demand of private
housing and enhance growth of economy.
Government interventions: The UK government can try to create balance in market
inequities with the helps of different aspects such as, taxation, subsidies and other activities. It
supports to carry out fairness in market and increasing the social welfare such as more
employment, increase staff member assembly, effective labour situation and increase level of
income in broad manner. Such as, To specify the demand of private housing necessary to
analysis of all the regulations that are based on the price ceiling as per the control procedure. It is
increasing greater rent tend in order to make contribution for purchasing a house property as per
the effective demand and many others.
Affordable housing policies: In present time UK government can prepare effective
affordable housing policies and due to low interest in present time mostly people prefer to
purchase house. This policy impact on the rental house and people do not take interest to take
house of rent and they wants to purchase house in right price.
Pump pricing policy: This pricing policy based on the tax reduction in which focus on
the tax policies that set by the government for household properties. It is defined as best policy
that enhance private investment but do not focus on any other activity. It is a best source way of
funding for private business entity. In case of pump pricing policy require to set better policy that
not only focus as strategy but also selected as method of spending too. With the help of this
policy set up specifying credit policies in regard of credit expansion that increase viability of
mortgage and basically make individual able to invest into private housing.
Some other policies made by government are discussed underneath:
There are discussed other policies which is applied by the government for the household
properties such as:
Planning permission/ green belt land: At the region of UK. There are different strict
specific particular restrictions in which focus on the green belt region in order to increase all the
components that could not dangerous and destructive. There are discussed some factors which is
consisting under the this policies such as:
 Farming and agriculture land
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