Comprehensive Analysis of the UK Housing Market and Interventions

This report provides a comprehensive analysis of the UK housing market, examining key aspects such as market dynamics, the impact of Brexit, and the roles of government and local authorities. It delves into the influence of demographic factors, income stability, and the overall economic condition on housing prices. The report explores government interventions, including subsidies, taxation, and zoning regulations, and their advantages and disadvantages. It also investigates the role of local authorities in stabilizing the housing sector and protecting the interests of tenants and landlords. Furthermore, the report discusses the responsibilities of landlords and the significance of corporate social responsibility within the UK housing market. The analysis includes an overview of market stakeholders, price fluctuations, and the impact of various factors on demand and supply within the real estate sector. The report also addresses the challenges faced by the government in meeting the housing needs of a growing population and the measures taken to address these challenges, such as encouraging self-building schemes and relaxing planning restrictions. Finally, it explores the concept of libertarianism and its relevance to local authorities in the context of providing affordable housing.

UK Housing Market

Table of Contents
INTRODUCTION...........................................................................................................................1
UK Housing market.........................................................................................................................1
About Housing market of UK......................................................................................................1
Role of the government in housing market..................................................................................2
Advantages and disadvantages of government interventions......................................................3
Role of government.........................................................................................................................4
Role of local authorities and its impact on UK housing market..................................................4
Description of landlords and their role affecting UK housing market........................................5
Description to the statement “The Housing market cannot be left to the market”..........................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Housing sector is considered to be one of the most important aspect of market as it directly
contributes to enhancement of GDP. The report makes a comprehensive discussion regarding
housing market of UK and various issues that are being faced by the market since Brexit
negotiation have started from EU. There are various conditions based on which the prices of
various real estate element in the form of demographic factors, income stability and overall
economic condition of the country. The report will then be focussing upon role of government in
housing market and various barriers that take place due to interventions from their side. Local
authorities also play an important role in stabilizing housing sector in such a manner that rights
and interest of tenants and landlords can be protected. The report also discusses regarding
important of corporate social responsibility in housing sector of UK.
UK Housing market
About Housing market of UK
In General, it is a market of houses that are actually being purchased and sold by the
buyers, either through brokers or directly by the seller. It is a real estate market place, where a
Fundamental forex trader is responsible of keeping a close eye on housing market of the country
and assessing the ongoing prices of houses at different locations. Buoyant housing prices reflect
an increase in the consumer spending. It is an effective indicator of strong economy (Cuéllar-
Franca and Azapagic, 2012). The main stakeholders that belong to real estate industry are
homeowners who are interested in selling their properties, real estate investors who buy
properties solely for resale purposes, rentals, renovators, contractors as well as real estate brokers
who generally act as a facilitator between the buyer and seller, etc.
The main elements of housing sector which are directly related to demand are due to
presence of demographic factors. However, there are other determinants as well, which are
equally important, such as, availability of credit, preferences of the customers, factors related to
incomes, etc. Demographic factors are related to size of market as presence of more consumers
will lead to bring hike in demand. Other factors are rate of marriages, divorce and death that can
give a clear-cut idea related to tremendous growth in overall population statistics (Wilcox and
Perry, 2014).
Real estate market has been quite convincing in terms of inflating and deflating prices
every day. It is due to changes in demand, supply and economic condition of the country. A
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tremendous decrease in the prices of houses has been noticed since the year 2009. As per the
official statistics revealed by the government, the growth in house prices have fallen to 4.4pc in
February, 2018 which is overall decrease of 0.3pc in comparison to January. It can be stated that
on an average, there is a decrease in the growth rate of prices of houses by 0.1 pc per month. An
annual decrease in the growth rate is 1pc (The Housing Market and Government Intervention,
2011).
In order to buy a house in UK, the average amount to be paid by the buyer was £225,000
which is £9000 expensive in comparison to what it was a year earlier. As per the research
conducted by Royal Institution of Chartered Surveyor (RICS), a net balance of 47 pc surveyors
has seen prices to fall situated in the city. Other decline in prices has been noticed in North east
of England and East Anglia as well.
Figure 1: Annual house price growth
(Source: Six factors influencing the UK property market in 2018. 2018)
Researchers and economists have stated that due to Brexit negotiation going on between
Britain and European Union, it has become difficult to analyse the rise and fall in housing
market. It has made the prediction of real estate prices to be difficult. The manner in which
housing prices are performing helps in ascertaining bigger picture of development in the form of
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wider economy and path of interest rates. Brexit, being a key factor of UK’s economy, hence it
has major impact on prices prevailing in real estate market (Hodkinson and Robbins, 2013).
Role of the government in housing market
Government is able to put its interventions in real estate market in the form of subsidies,
taxation, rental control, zoning, real estate legislations, price flooring and ceiling policies,
transactions cost and other involved procedures, restricting the involvement of financial
institutions in real estate market and licensing market participants. The choice of method adopted
by the government may vary as per their prevailing economic condition of consumers as well as
overall economy. The depending factors can be political slant of government in UK and level of
institutional and economic development. Some countries also provide residence permit to the
foreigner who are involved in investing in real estate market.
As per the current state of real estate in UK, the main concern of government is that there
have not been enough homes in UK in order to meet the requirements of growing and aging
population. The constraint has made the prices of housing sector of UK to be relatively stable for
the last 3 years (Dowson and et.al., 2012). More than 15% of the total population of UK make
use of private rented sector and figure is expected to get doubled in next 10 years. Hence, it can
be stated that the elasticity of supply is quite low which requires amendments in prevailing laws
and policies of the country. Some of the steps that have been taken by the government of UK to
ensure proper home to everyone are: Encouraging self-building schemes: It is easy to adopt for self-building home techniques.
This is considered to be a cheaper source for long run. It helps in providing satisfaction to the
builders where they can build their homes as per their own specifications and design. Loosening planning restrictions: Government has initiated relaxation in planning aspect
inclusive of loosening the laws and policies with respect to greenbelt restrictions, which was
prevailing earlier (Clapham and et.al., 2014). Reduction in number of empty homes: Compulsory purchase order is one such method
which can help in reducing the prevalence of empty homes in UK. If the owner leaves
property empty for more than 6 months, in that case, it will be made available to people
mentioned on housing waiting lists at a rent prevailing in sub market. Tax breaks: Government of UK has also relaxed taxes so that people can get their rented
apartments at affordable prices (Swan and et.al., 2013).
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Advantages and disadvantages of government interventions
Government interventions play an important role in understanding the market and take
action in such a manner that economic condition of the market can be kept stable. Effective
interventions can help in improving the operations of market. However, ineffective asset of
actions can lead to ineffective market operations showing negative side of government
interventions as well. One of the most important role of government in housing sector is related
to controlling prices in such a manner that price ceiling and price flooring are not crossed by real
estate dealers (Oxley and Smith, 2012). Hence, it can be stated that there is a direct relationship
between prices and government intervention whose maximum and minimum are changed as per
the current condition of the economy and average buying power and personal disposable income
of individuals living in UK. Government can also put interventions in mortgage securities,
availability of loan for buying a house, lack of availability of credit for new mortgages, etc. In
such cases, action taken by the government by bringing adequate fluctuations in interest rates,
can help in solving out the issue and reduce the same to minimum possibility (Harlock, 2013).
Charging less amount in the form of insurance by regulating the insurance companies and
inevitable steps for under-pricing the guarantee is the other common intervention policy used by
the government dwelling in favour of people. Various actions plan can be implemented by the
government in the form of subsidies to the home owners, lowering down interest rate of loans,
making the renting legislative more attractive with the help of rent control interventions and
creative more areas for affordable housing for people belonging to different economic tiers
(Shrubsole and et.al., 2014). The main aim of government is to provide housing facilities to
homeless by laddering through the interventions provided by them in order to promote housing
and rentals.
Analysing the alternative side of government interventions, the guarantee given by the
government for purchase of houses is latent and uncompensated. Government sometimes take
ineffective decisions that act as a barrier in growth and development of the sector. However, the
strategies for promoting housing in the country also have negative impact on the economy of the
country in the long run. Hence, some negative consequences can be borne by citizens of the
country due to adoption of these factors (Bromley, 2013).
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Role of government
Role of local authorities and its impact on UK housing market
Local authorities and communities tend to face a lot of pressure so as to provide significant
future to housing sector of the country. Common involvement is required in correct housing
offers and supporting house builder so that adequate amount of housing facilities is available to
people. Local people tend to face various issues with respect to affordability of the houses. The
landlords also have to make various decisions in relation with new development, renovation,
investment, allocation and tenure, can help in shaping and offering them at areas of housing
(Sunikka-Blank and et.al., 2012). Local authorities play an important role to coordinate with the
demand of both landlords and rentals to ensure that interest of both the parties can be preserved
in a manner that best framework of long and short-term outcomes for local area can be initiated.
An explicit and strategic approach in relation with tenure is created in such a manner that a
management can be initiated with respect to rent levels, affordable and social rent housing stock.
It is due to availability of proportion for tenancy is generally small. Understanding the prevailing
market and taking actions based on it can help in framing better policies. Identification of trends
in such a manner that interest of both tenants and land owners can be preserved. Better
understanding of market is initiated through analysis of population and assessing their
belongingness to a specific tier can help in preparation of rather more impactful actions.
However, the role of local authorities and their decision making can be ineffective if appropriate
steps are not taken by them after the situation of analysis (Killip, 2013).
Libertarianism is an important aspect to be known to local authorities as well. It is related
to upholding liberty as a core principle and taking any actions related to housing sector, based on
it. It helps in maximizing political freedom and anatomy. Hence, adequate emphasis is given on
freedom of choice individual judgement, voluntary association and believing in individual rights
that are directly related to it. Hence, it can be stated that having libertarianism to people help in
providing affordable housing.
Description of landlords and their role affecting UK housing market
Landlords are the owners of house, apartments, land or other real estate which is rented to
the other individual who are called as tenants. The person in juristic nature is commonly called
as owner. They treat their real estate as a source of income and conduct their business through it.
The private sector renting is generally governed by the act initiated by the government called,
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Landlords and tenants Act, 1985. It has all the rules and regulations that are required to be
followed by the tenants and landlords. Rents can be increased by the landlords only after giving
proper information about it to the tenants. Moreover, all the important policies and procedures
must be mentioned in it which are required to be followed by both the parties during renting
tenure.
The concept of corporate social responsibility has been able to gain adequate recognition in
the housing sector due to adoption of new pattern of business (Cornforth, 2012). There are
various CSR elements that are required to be considered in the housing sector. It has direct
association to use of various environmental friendly elements, such as, landscaping, adoption of
environmental friendly material for building new houses and getting them renovated, sustainable
design of the building specially focussing on energy saving techniques, etc. There are other
social amenities that are also required to be considered. These are, recreational parks, sports
facilities, playgrounds, meeting places for the residents, near availability of schools, etc. Safety
in the building and near to its surroundings are also required to be considered by the team while
indulging in housing sector and building of new houses. Quality of the environment is another
CSR element, inclusive of proximity to public transport, development density etc. Quality roads
and finishes are the other two main factors of focussing on CSR.
Description to the statement “The Housing market cannot be left to the
market”
The statement, “The Housing Market cannot be left to the market, implies that housing
market can not be left alone and let it be the way it is. However, strong actions are required to be
taken by government so as to ensure that all the important policies and procedures are followed
by seller and land lords. It works on common principle that every individual requires home and it
is his right to get it in the most adffordable prices. Hence, it can be stated that intervention from
the side of government is important to be ensured so that rights and interest of the individual can
not be compromised (Gibbs and O’Neill, 2015).
UK housing market have been quite volatile these days due to constant decrease in
overall growth rate of prices of the properties available there. In such cases, it becomes important
for the government and other local authorities to keep an eye over its happening so that better
strategies can be promoted in this sector. UK housing is easily driven by Brexit negotiation,
which is going on in the country. Hence, the prices are majorly fluctuating. In such cases,
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liberalised behaviour followed by the government can help in bringing adequate growth to this
sector in such a manner that affordable housing facilities can be provided to the people belonging
to all tiers of economy (Benbouzid and Mallick, 2013).
Not having any intervention from the side of government can make the industry volatile
with no restrictions of prices and other aspects of this sector. It can also hamper the interest level
of landlords and tenants to some extent. Hence, it can be stated that “Housing sector cannot be
left to the market”
CONCLUSION
From the above report, it can be concluded that, Housing sector have been quite volatile
since the negotiation for Brexit have been started in the country. The report discussed regarding
importance and disadvantages of government interventions in such a manner that interest of
landlords and tenants can be protected. The policies and procedures adopted by the UK
government helps in ensuring that the prices of properties and other real estate does not go
beyond price flooring and price ceiling mechanism. Government interventions play an important
role in understanding the market and take action in such a manner that economic condition of the
market can be kept stable. Hence it can be used by the government and other local authorities to
bring control over the prices.
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REFERENCES
Books and Journals
Cuéllar-Franca, R. M. and Azapagic, A., 2012. Environmental impacts of the UK residential
sector: life cycle assessment of houses. Building and Environment. 54. pp.86-99.
Wilcox, S. and Perry, J., 2014. UK housing review. Coventry: Chartered Institute of Housing.
Hodkinson, S. and Robbins, G., 2013. The return of class war conservatism? Housing under the
UK Coalition Government. Critical Social Policy.33(1). pp.57-77.
Dowson, M. and et.al., 2012. Domestic UK retrofit challenge: Barriers, incentives and current
performance leading into the Green Deal. Energy Policy. 50. pp.294-305.
Clapham, D. and et.al., 2014. The housing pathways of young people in the UK. Environment
and Planning A. 46(8). pp.2016-2031.
Swan, W. and et.al., 2013. Adoption of sustainable retrofit in UK social housing. Structural
Survey. 31(3). pp.181-193.
Oxley, M. and Smith, J., 2012. Housing policy and rented housing in Europe. Routledge.
Shrubsole, C. and et.al., 2014. 100 Unintended consequences of policies to improve the energy
efficiency of the UK housing stock. Indoor and Built Environment. 23(3). pp.340-352.
Sunikka-Blank, M. and et.al., 2012. Improving energy efficiency of social housing areas: A case
study of a retrofit achieving an “A” energy performance rating in the UK. European
Planning Studies. 20(1). pp.131-145.
Killip, G., 2013. Transition management using a market transformation approach: lessons for
theory, research, and practice from the case of low-carbon housing refurbishment in the
UK. Environment and Planning C: Government and Policy. 31(5). pp.876-892.
Cornforth, C., 2012. Nonprofit governance research: Limitations of the focus on boards and
suggestions for new directions. Nonprofit and voluntary sector quarterly. 41(6). pp.1116-
1135.
Gibbs, D. and O’Neill, K., 2015. Building a green economy? Sustainability transitions in the UK
building sector. Geoforum. 59. pp.133-141.
Benbouzid, N. and Mallick, S., 2013. Determinants of bank credit default swap spreads: The role
of the housing sector. The North American Journal of Economics and Finance. 24.
pp.243-259.
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Bromley, R. ed., 2013. The urban informal sector: critical perspectives on employment and
housing policies. Elsevier.
Harlock, J., 2013. Impact measurement practice in the UK third sector: a review of emerging
evidence.
Online
Six factors influencing the UK property market in 2018. 2018. [Online]. Available through <
https://www.theguardian.com/business/2017/dec/26/six-factors-influencing-the-
property-market-in-2018>.
The Housing Market and Government Intervention. 2011. [Online]. Available through <
http://www.aei.org/publication/the-housing-market-and-government-
intervention/>
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