RICS predicts house prices will only increase by +2% in 2010

2010 set to be a strong year for landlords

Landlords not liable for tenant’s unpaid water bills

The UK won’t reach pre-recession levels before the end of 2011, says the CBI

Tesco looking to return to regeneration market

According to the latest Royal Institute of Chartered Surveyors’ ( RICS) UK Housing Market Forecast house prices will finish at 1-2% +higher in 2010 compared to current prices, with transactions likely to rise to an average of 70,000 per month from 55,000-60,000 in today’s market.

It stated that supply will increase but have trouble keeping up with demand in early 2010, and so should provide a platform for further house price rises. However, the narrowing in the gap between supply and demand will gradually begin to exert a greater influence on the market throughout the year.

Simon Rubinsohn, RICS’ chief economist said: “The imbalance between supply and demand will continue into the early part of the new year resulting in some further house price gains. However, the combination of more available property and the beginning of the exit strategy from the big stimulus programmes that have helped support the economy will gradually exert a greater influence.

“Transactions levels are likely to increase, fulfilling the Christmas wish list of many agents throughout the country but first time buyers are likely to continue to struggle to procure finance from lenders without the help of generous relatives.”

The continued cautious approach adopted by lenders, the uncertain economic climate and a flat labour market are all also likely to mean that prices will not increase by much more than they started.

2010 set to be a strong year for landlords

According to LSL Property Services, buy-to-let re-emerged as an attractive investment in 2009 as total annual returns reached 4.1%, giving a rental yield of 4.6% taking into account void periods and a small capital loss due to a fall in house prices.

In 2008 a typical landlord lost £23,000 in capital value, but earned £7,900 in rent for the 12 months however, this resulted in a total loss of £15,100 compared to 2009 where the landlord would have lost just £600 on the capital value of the property, earned £8,000 in rent, resulting in a total profit of £7,400.

David Brown, commercial director of LSL Property Services, said: “After a difficult year, the end of 2009 has seen buy-to-let return as a profitable investment. Returns have not only turned positive- they’ve hit an 18-month high. Property bought a year ago and rented out is making a handsome profit for investors. With property prices rising, landlords are making impressive capital gains as each month goes by too. In November, landlords chalked up £1,474 in capital gains on a typical rental property.”

LSL predicts that in 2010 landlords should expect to make £8,000 in rental income a capital gain of around 5%, equivalent to a capital return of around £8,000, bringing a total return of £16,000, or just below 10%.

Brown said: “2009 marked a watershed for the private rental sector, and landlords have had to ride out the economic storm. 2010 is likely to be equally critical with regulation of buy-to let mortgage lending set to be introduced. Regulation should help filter out unscrupulous mortgage advisers which will be positive for the sector. The downturn has already pushed many of the short-term investors out of the market too. Buy-to-let is an essential part of our housing market – we need well capitalised, experienced, professional landlords. With returns rising, they can once again look forward to investing more in the sector to meet our housing needs.”

Landlords not liable for tenant’s unpaid water bills

After intervention by the British Property Federation (BPF) the National Landlords Association (NLA) and Residential Landlords Association (RLA), the Government’s proposal that landlords would be automatically liable for their tenants unpaid water bills has not been implemented after its water charging review decided that landlords would have to notify water companies of changes in tenancy, and if they failed to do so, only then would the liability transfer to them.

Ian Fletcher, BPF’s director of policy (real estate), said: “Our actions have averted the immediate threat of legislation that could have seen landlords automatically liable for their tenants’ water bills. Following lengthy discussions with the water companies and Review team we believe a satisfactory outcome has been achieved.

“The water companies have significant problems with bad debts. However, to make landlords instantly liable for their tenants’ water usage and debts would have been inequitable and run against the environmental objectives of wider water metering. We are pleased therefore to have thrashed out a compromise that sees landlords and water companies working together for the benefit of the wider public.”

The review also looked at charges for shared accommodation, or houses in multiple occupation (HMOs), where it concluded that in such properties it was often general practice for the property owner to be billed for water charges with the owner often recharging the occupiers, making water metering difficult to implement.

The UK won’t reach pre-recession levels before the end of 2011, says the CBI

With the UK economy expected to exit the recession in Q4 of 2009, the CBI however, has stated that growth will continue to be subdued and gross domestic product (GDP) is not likely to reach pre-recession levels before the end of 2011.

Its economic forecast for December 2009 predicted that the recession will end when UK growth resumes in the fourth quarter as consumer spending rises in anticipation of the forthcoming VAT rise. Growth in the first two quarters of 2010 will subsequently be weak at +0.3%, but should improve as the global economic recovery gathers pace with businesses rebuilding stocks and household spending improving. Growth in the range of 0.5- 0.7% is expected to be maintained through to the end of 2011.

John Cridland, CBI’s deputy director-general, said: "Although the first few months of 2010 will be difficult, growth will gradually pick up and increasing confidence and demand will lead the UK into a more positive 2011. Consumer spending looks to be slightly more resilient than we first thought, and a weaker pound will help to support export growth.

"However, the economy will be on a fragile path of very slow growth, as we continue to feel the lasting effects of the financial crisis. And it remains vital that government sets out clearer plans to address the fiscal deficit at its next opportunity in order to help shore up future UK economic prospects."

The CBI also forecasted that the Bank of England (BoE) will start to raise interest rates in spring 2010, increasing them up to 2% by the end of the year, with no further rises during 2011.

Tesco looking to return to regeneration market

In a positive sign for the retail market, Tesco looks likely to restart some of the mixed-use work it put on hold, with its £400m Woolwich project in London among those set to restart, nine months after it put the bulk of its regeneration investment programme on ice.

Contractors and consultants in the supermarket’s supply chain have been told some of its mixed-use schemes are to come back on line in the beginning of 2010, with the retailer likely to be re-scoping the schemes to make them more commercially viable, which could result in the projects containing a smaller residential element.

According to Building Weekly, it was unlikely that plans would be changed enough to require new planning applications.

This is the latest in a flurry of good news for firms working in the supermarket sector. In September, Sainsbury’s said it would extend its £1.6bn store expansion plan for at least another two years beyond 2011, and Waitrose said it planned to double its stores.

PIN’s latest mortgage recap