Businesss environment - Essay Example

Business Environment- Recent Developments in the UK Housing Market Question 6: Why is there a waiting list for affordable housing in the UK? What policies could the government undertake to improve the situation? There are more than two million people in the United Kingdom who struggle to pay their mortgages and rent. This in turn affects the chances of payment. Many home owners are having their houses recuperated; this is because the home owners are not able to keep up and pay their mortgages reimbursements.

Another reason for the common waiting list is the fact that families on low incomes and are renting homes have to live in poor living states and no security. The government should renovate existing houses because the households earning low incomes are entirely relying on private rented sectors that are not regulated. These areas are characterised by poor living conditions and security. It is important for the government to develop more housing because there are more than 1.7 million families on local authority housing waiting lists.

This is a significantly huge number. The government should ensure that the new houses are environmental friendly and affordable to everyone needing them (Barker, 2008). Question 7: What reasons might account for the falling numbers of first time buyers in the UK property market over the last decade? What effects might a falling number of first time buyers have on the overall UK property market? The first time buyers in the UK property market are important because they act as liquidity source to the whole housing market.

These first time buyers generally bridge the gap thus enhancing transactions as regards the housing property. The rates of transactions that proceed in the housing market may stall if the first time buyers are unavailable. Between 1998 and 2007, house prices increased steadily in the United Kingdom, making the ownership for the first buyers to be unaffordable. Interest rates for the first time buyers affected them to a comparatively wide margin (Barker, 2008). This is because the group may not have built up a previous equity and many of them may be earning low incomes than other people.

When the first time buyers think of house affordability, they first consider the real interest rates given. On the other hand, the first time buyers may face more severe affordability burdens when prices of houses quickly upsurge. Lastly, it is imperative to note that structural shifts in mortgage or credit availability are other factors that led to fall of first time buyers purchasing homes. Question 8: Explain how the policies announced by the Coalition government might help to improve affordability?

In 2010, the government introduced a mortgage rescue scheme that protected the low income households from being recuperated. The mortgage scheme consisted of two parts including the equity loan which was an interest loan issued by various housing associations. The interest rates could pay off between 25% and 75% of the mortgage rates thereby reducing monthly costs. On the other hand, an interest rate of 1.75% was implemented on the loan (Barker, 2008). Clearance of the loan payments would be done when the house was being sold or when circumstances were enhanced.

The government devised a mortgage to rent program that allowed various households to stay in their houses even though they could not manage to be the owners of the house (Jones, White and Dunse, 2012). This is because the households either had debts accumulated on their house or they had faced unemployment for a longer duration. The housing association purchases the house and lets the former owners to stay in the house as tenants. This policy was considered to substitute the self to rent schemes of private owners that charged high rents on their tenants and offered short term contracts (Barker, 2008).

Question 9: What other policies could the Government implement in order to reduce the volatility in house prices? Improving house affordability among the people and dropping housing volatility have been on-going issues for the United Kingdom governments. Some major policy initiatives were: new build indemnity scheme whereby home builders federation provided 95% mortgages for the fresh builds by the government warranting the loan issued. The first buy policy initiative is a 20% equity loan issued by the house builders and the government to assist fund deposits (Smith and Searle, 2010).

In addition, another policy to be implemented is the growing places fund. The government offers €500 million for infrastructure projects done locally and are unblocking new housing expansions. The Britain building investment fund of €400 million, in supporting the small and medium sized house building companies needing development finances is also another measure (Stephens, 2011). Another policy is the ‘build now pay later policy’ which will allow home builders to start building projects with no costs of land payment.

Introducing land auction and new homes bonus policies would help in reducing volatility in house prices. In addition, community infrastructure policy may be important because it will enable local authorities to need developers in contributing to the infrastructure costs (Stephens, 2011). Question 10: On the basis of all the evidence presented in the case study and otherwise, do you think UK house prices are likely to increase, fall or stay the same over the next five years? Explain your answer.

According to Goodhart and Hofmann (2008), the United Kingdom house prices are likely to fall because the government had announced its intention in speeding up and simplifying the United Kingdom planning system. This was to reduce the delays and perils in attaining planning approvals. On the other hand, giving the people more say on the location and kinds of new properties and more reimbursements of the progress of their people will assist in lowering the house prices (Goodhart and Hofmann, 2008).

In addition, the government is allowing for reforms in the banking sector with an aim of reducing its potential to destabilising the entire economy, as well as the housing market. When the government completes the building of more houses, it will be able to keep up the pace with the needs of the population (Smith and Searle, 2010). This means that in future, the housing needs will have been met for every person at relatively low prices. References Barker, K., 2008, Planning policy planning practise and housing supply, Oxford Review of Economic Policy, Volume 24, Number 1, pp. 34-49. Goodhart, C.

, and Hofmann, B., 2008, House prices, money, credit and the macro-economy, Oxford Review of Economic Policy, Volume 24, Number 1, pp. 180-205. Jones, C., White, M., and Dunse, N., 2012, Challenges of the Housing Economy, New Jersey: John Wiley & Sons. Smith, S. J., and Searle, B. A., 2010, The Blackwell Companion to the Economics of Housing, New Jersey: John Wiley & Sons. Stephens, M., 2011, Tackling housing market volatility in UK, JRF Housing Market Taskforce, available at http://www.jrf.org.

uk/sites/files/jrf/housing-markets-volatility-full.pdf.