Analysis of the Article Rents Rise as Supply and Demand Favors Landlords - Research Paper Example

 “Rents rise as supply and demand favors landlords” Article AnalysisThe article “Rents rise as supply and demand favors landlords” talks about the supply and demand of money in the housing sector of the United Kingdom. The rise in the rents has taken a lead as compared to salary rises, making it difficult for people to afford rents. As a consequence of the sharp rise in the rent the tenants are going into arrears. The article uses the principle of supply and demand for the explanation of the rise in the rents.

The demand and supply gap for property is rising in the UK. The accidental landlords, the ones who have rented out their property by chance have decreased after the recent financial crises in the UK. This was the supply side picture of the housing sector, showing the decrease in supply. However, this is not the only reason for the demand and supply gap, an increased demand is also the factor contributing to the gap. The demand has increased because originally people buying houses are being rejected for mortgages due to the financial crises, thus increasing the number of tenants and adding to the supply and demand gap.

Thus as the number of first time buyers decreased the rents and the power of landlords increased. This is also increasing private rentals and giving way to the landlord scams in which the more and more tenants are getting trapped. This article is a good example of the supply and demand concept that we have studied in the class. The theory of demand and supply deals with the forces of resource allocation. Demand means quantity required by the buyers and supply is the quantity provided by the sellers.

When the law of demand says that demand is inversely proportional to price, the greater the price lesser the demand. The law of supply states that the greater the price the greater will be the supply. The point where the demand and supply interacts is known as the equilibrium which is the point where the demand equals the supply. The movement on the demand and supply curves occurs along the line as well as in terms of shifting of the line. (“Equilibrium”) In the above article we saw that the demand of rents was not equal to the supply.

The increase in demand for the rental houses shifts the demand curve upward thus increasing the rentals charged by the landlord. This change in the equilibrium position gave more power to the landlords thus victimizing the tenants.In conclusion, what is required in UK is the government intervention in stabilizing the rental market and giving relief to the tenants. The improvement in the economy through economic growth will result in the betterment of rentals as more mortgages would be made and the pressure on rent would decrease thus removing the landlord’s extra power.

References CitedCollinson, Patrick. "Rents rise as supply and demand favors landlords." guardian.co.uk. NN.P, 17 September 2010. Web. 13 May 2011. .Equilibrium." Economics Basics: Demand & Supply. Web. 13 May 2011. .