| Year | Average Monthly Rent (£) | Vacant Rental Units (%) |
|---|---|---|
| 2012 | 850 | 5.4 |
| 2014 | 920 | 4.8 |
| 2016 | 1010 | 4.1 |
| 2018 | 1120 | 3.2 |
| 2020 | 1250 | 2.1 |
| 2022 | 1400 | 1.5 |
| 2024 | 1580 | 0.9 |
| The escalating cost of private residential tenancies in Metro City has prompted intense debate over regulatory policy. Tenants' advocates argue that low-income households are being priced out of urban centres, leading to rising levels of homelessness and long-distance commuting. In response, municipal authorities are evaluating the implementation of a statutory maximum price on monthly rents. Opponents, however, caution that capping rents below market-clearing levels will disincentivise landlords from maintaining properties and discourage developers from constructing new residential units, ultimately exacerbating the housing shortage. | 1 |
| To address the broader affordability crisis, several complementary measures are under consideration. First, the local authority could expand municipal housing construction. Second, tax incentives could be introduced for build-to-rent developers. Third, tenant protection laws could be strengthened to prevent arbitrary evictions. Lastly, the presence of significant positive externalities associated with stable, affordable housing—such as improved educational outcomes for children and better community health—suggests that market forces alone will fail to achieve a socially optimal allocation of resources. | 5 |
Define the term ‘maximum price’ (Extract E, line 5).
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.