Buy to let Britain booms amid mortgage famine – but can it last?

Average rents in London now exceed £1,000 a month – or £1,025 to be precise – for the first time, according to a survey of 18,000 flats by LSL Property Services.

Rents in the capital increased by 6.6pc last year – and by 4pc across England and Wales to a national average of £713 a month – as rising numbers of people find it impossible to buy. The house price crash that many wish for  has yet to materialise and house prices continue to rise in London. Meanwhile, credit crunched banks and building societies remain reluctant to lend.

According to the Council for Mortgage Lenders, only about 189,000 first time buyers secured loans last year, compared to an average of nearer 390,000 a year before the credit crisis.

No wonder Scottish Widows predicts that by the time tuition fee increases have added to graduate debts, the average age of first time buyers in Britain will rise to 44. It was 27 just a few decades ago.

Meanwhile, everybody has to live somewhere and it all adds up to good business for buy to let landlords. David Newnes, managing director of LSL said: “In the last two years, average rents have risen by more than £50 a month.

“With significant improvement in the number of buyers able to secure a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards. Recent graduates moving for their first jobs have further exaggerated the long-term and growing demand from frustrated buyers. ”

Rising numbers cannot even afford to rent a flat of their own. Jonathan Moore, director of Easyroommate.co.uk, said: “Lenders’ unrealistic deposit requirements, combined with hefty house prices have left the private rented sector groaning under the strain of demand from frustrated first-time buyers.

“Such strong competition for limited accommodation is taking its toll on rents, and they will continue to climb for as long as the mortgage market remains at a standstill. As rents rise, driving down affordability in the private rented sector, many renters are cutting costs by turning to flatshares.”

Others are simply failing to pay their rent. According to LSL, 10.7pc of all the rent due last month went unpaid – an increase in arrears of nearly a fifth over the last year. Even when demand consistently runs ahead of supply, there is only so much the market can bear before signs of strain start to show.

Grocery workers give notice to cancel labor contract [Updated]

In a bid to speed up negotiations that have dragged on for more than eight months, union officials representing supermarket workers in Southern California took one step closer Thursday night to going on strike.

Their move: Officials from the United Food and Commercial Workers gave a 72-hour notice to cancel their labor contract extension with the region’s three leading grocery chains -- a mandatory final step before a walkout. Once the contract is no longer in effect, grocery workers can strike at any time.

Although the union is obligated to give the companies 72 hours' notice, the action does not guarantee workers will walk off the job Sunday. 

Albertsons said in a statement: “We are disappointed that union leadership decided to take this step. We are still in active negotiations.... We don’t want a strike, and we hope to continue bargaining rather than continue to alarm our associates and our customers.”

Kendra Doyel, spokeswoman for Ralphs, said: “Even though the union leadership has cancelled the contract extension, our stores are open for business. Bargaining will continue over the next three days and we remain hopeful that an agreement can be reached.”

[Updated Sept. 15, 9:15 p.m.: Vons said it and the other employers “intend to remain focused on the negotiation process and urge the unions to do so the same.”]

In a statement, Rick Icaza, president of UFCW Local 770 in Los Angeles, said: “We returned to the bargaining table ready to compromise and make a deal that keeps our employers profitable but protects the jobs of our members. Instead, we got more of the same stonewalling from the supermarket corporations.…We don’t want to strike, but if they won’t negotiate, we have no choice.”

The labor negotiations, which have grown increasingly tense in recent weeks, stalled amid deep divisions over healthcare funding, worker scheduling and future staffing levels.

Officials from the United Food and Commercial Workers and negotiators for Ralphs, Vons and Albertsons have been meeting steadily since a recent strike-authorization vote by union members won strong support.

The labor contract approved in 2007 expired March 6. It had been extended day to day, until Thursday evening.

The canceled contract covered an estimated 62,000 checkers, baggers, meat cutters and other grocery workers across the region, including those employed by Ralphs, which is owned by Kroger Co. of Cincinnati; Vons and Pavilions, owned by Safeway Inc. of Pleasanton, Calif.; and Albertsons, which is owned by SuperValu Inc. of Eden Prairie, Minn.

The contract also covered employees at other companies that are negotiating separate deals. So the number of workers in Southern California that might walk off the job if a strike does happen in the coming days is about 54,200, according to data provided by Ralphs, Vons and Albertsons.

Thursday’s news harks back to 2003, the last time Southern California grocery workers and their employers faced a standoff over labor issues. The 141-day strike and lockout that began that fall left many union members with staggering debts. It reportedly cost the employers an estimated $2 billion and gave competitors an opportunity to step into the gap.

RELATED:

ADP jobs report shows paltry growth again

Employees satisfied with co-workers, unhappy with benefits

Stocks fall in eurozone as U.S. jobs report adds to investor worries

-- P.J. Huffstutter

Photo: NAACP members participating in the NAACP's 102nd annual national convention at the Los Angeles Convention Center this summer join a labor march and a rally in front of a Ralphs grocery store in Los Angeles. Credit: Kevork Djansezian / Getty Images

UPDATE: Grocery workers give notice to cancel labor contract

UPDATED: 8:28 p.m.

In a bid to speed up negotiations that have dragged on for more than eight months, union officials representing supermarket workers in Southern California took one step closer Thursday night to going on strike.

Their move: Officials from the United Food and Commercial Workers gave a 72-hour notice to cancel their labor contract extension with the region’s three leading grocery chains -- a mandatory final step before a walkout. Once the contract is no longer in effect, grocery workers can strike at any time.

Although the union is obligated to give the companies 72 hours' notice, the action does not guarantee workers will walk off the job Sunday. 

Albertsons said in a statement: “We are disappointed that union leadership decided to take this step. We are still in active negotiations.... We don’t want a strike, and we hope to continue bargaining rather than continue to alarm our associates and our customers.”

Kendra Doyel, spokeswoman for Ralphs, said: “Even though the union leadership has cancelled the contract extension, our stores are open for business. Bargaining will continue over the next three days and we remain hopeful that an agreement can be reached.”

Officials from Vons could not be reached for comment Thursday evening.

In a statement, Rick Icaza, president of UFCW Local 770 in Los Angeles, said: “We returned to the bargaining table ready to compromise and make a deal that keeps our employers profitable but protects the jobs of our members. Instead, we got more of the same stonewalling from the supermarket corporations.…We don’t want to strike, but if they won’t negotiate, we have no choice.”

The labor negotiations, which have grown increasingly tense in recent weeks, stalled amid deep divisions over healthcare funding, worker scheduling and future staffing levels.

Officials from the United Food and Commercial Workers and negotiators for Ralphs, Vons and Albertsons have been meeting steadily since a recent strike-authorization vote by union members won strong support.

The labor contract approved in 2007 expired March 6. It had been extended day to day, until Thursday evening.

The canceled contract covered an estimated 62,000 checkers, baggers, meat cutters and other grocery workers across the region, including those employed by Ralphs, which is owned by Kroger Co. of Cincinnati; Vons and Pavilions, owned by Safeway Inc. of Pleasanton, Calif.; and Albertsons, which is owned by SuperValu Inc. of Eden Prairie, Minn.

The contract also covered employees at other companies that are negotiating separate deals. So the number of workers in Southern California that might walk off the job if a strike does happen in the coming days is about 54,200, according to data provided by Ralphs, Vons and Albertsons.

Thursday’s news harks back to 2003, the last time Southern California grocery workers and their employers faced a standoff over labor issues. The 141-day strike and lockout that began that fall left many union members with staggering debts. It reportedly cost the employers an estimated $2 billion and gave competitors an opportunity to step into the gap.

RELATED:

ADP jobs report shows paltry growth again

Employees satisfied with co-workers, unhappy with benefits

Stocks fall in eurozone as U.S. jobs report adds to investor worries

-- P.J. Huffstutter

Photo: NAACP members participating in the NAACP's 102nd annual national convention at the Los Angeles Convention Center this summer join a labor march and a rally in front of a Ralphs grocery store in Los Angeles. Credit: Kevork Djansezian / Getty Images

Ralphs, Albertsons and Vons workers give notice to cancel labor contract

In a bid to speed up negotiations that have dragged on for more than eight months, union officials representing supermarket workers in Southern California took one step closer Thursday night to going on strike.

Their move: Officials from the United Food and Commercial Workers gave a 72-hour notice to cancel their labor contract extension with the region’s three leading grocery chains -- a mandatory final step before a walkout. Once the contract is no longer in effect, grocery workers can strike at any time.

Although the union is obligated to give the companies 72 hours' notice, the action does not guarantee workers will walk off the job Sunday. 

Albertsons said in a statement: “We are disappointed that union leadership decided to take this step. We are still in active negotiations and have made progress during our talks this past week and a half. It’s important to remember that the 72-hour notice doesn’t change the terms of the existing contract, and it doesn’t mean a strike is imminent. All it does is give the union the ability to call a strike in the near future. We don’t want a strike, and we hope to continue bargaining rather than continue to alarm our associates and our customers. In the meantime, our stores are open for business and ready to serve the communities in which we operate.”

Company officials from Vons and Ralphs could not be reached for comment Thursday evening.

In a statement, Rick Icaza, president of UFCW Local 770 in Los Angeles, said: “We returned to the bargaining table ready to compromise and make a deal that keeps our employers profitable but protects the jobs of our members. Instead, we got more of the same stonewalling from the supermarket corporations.…We don’t want to strike, but if they won’t negotiate, we have no choice.”

The labor negotiations, which have grown increasingly tense in recent weeks, stalled amid deep divisions over healthcare funding, worker scheduling and future staffing levels.

Officials from the United Food and Commercial Workers and negotiators for Ralphs, Vons and Albertsons have been meeting steadily since a recent strike-authorization vote by union members won strong support.

The labor contract approved in 2007 expired March 6. It had been extended day to day, until Thursday evening.

The canceled contract covered an estimated 62,000 checkers, baggers, meat cutters and other grocery workers across the region, including those employed by Ralphs, which is owned by Kroger Co. of Cincinnati; Vons and Pavilions, owned by Safeway Inc. of Pleasanton, Calif.; and Albertsons, which is owned by SuperValu Inc. of Eden Prairie, Minn.

The contract also covered employees at other companies that are negotiating separate deals. So the number of workers in Southern California that might walk off the job if a strike does happen in the coming days is about 54,200, according to data provided by Ralphs, Vons and Albertsons.

Thursday’s news harks back to 2003, the last time Southern California grocery workers and their employers faced a standoff over labor issues. The 141-day strike and lockout that began that fall left many union members with staggering debts. It reportedly cost the employers an estimated $2 billion and gave competitors an opportunity to step into the gap.

RELATED:

ADP jobs report shows paltry growth again

Employees satisfied with co-workers, unhappy with benefits

Stocks fall in eurozone as U.S. jobs report adds to investor worries

-- P.J. Huffstutter

Photo: NAACP members participating in the NAACP's 102nd annual national convention at the Los Angeles Convention Center this summer join a labor march and a rally in front of a Ralphs grocery store in Los Angeles. Credit: Kevork Djansezian / Getty Images

Home Prices Are Down, but Rentals Are Rising

The housing market is gasping for air, and home prices are down to 2003 levels, according to the S&P/Case-Shiller Home Price Indices.

But that does not mean all housing is cheap. Rents are actually rising, according to the latest inflation data from the Labor Department. Last year, rents were essentially flat, but they have been rising steadily since the end of 2010. In August, rents paid for primary residences were up 0.4 percent compared with July, and 2 percent above a year earlier.

The reason is simply a matter of increasing demand for rental properties. In a better economy, the people who are now renting might be looking to buy a house. Many people do not have the financial capacity to get a mortgage. Interest rates are at historic lows, but lenders are making prospective borrowers go through ever more hoops to qualify for loans. People who are insecure about their jobs do not want to commit to mortgages, and those who are scraping by on unemployment insurance or savings certainly cannot buy a house.

“A lot of people are really changing their attitudes toward housing,” said Chris G. Christopher Jr.,
senior principal economist at HIS Global Insight. “So there is more renting going on.” With prices down, he said, housing “doesn’t seem like a very good investment.”

Inflation: Consumer prices up 3.8% from a year ago, biggest rise since 2008

On a day when the Federal Reserve is busy working with other major central banks to keep the European financial system from imploding, the Fed got some bad news on the economic homefront: U.S. consumer prices were up more than expected in August, lifting the year-over-year inflation rate to the highest level in three years.

The Consumer Price Index rose 0.4% in August from July, seasonally adjusted. That was double the 0.2% rise that economists had expected in a Bloomberg News survey.

Measured from a year earlier the CPI was up 3.8% in August, the biggest year-over-year gain since September 2008 -- just before inflation pressures eased as the economy crumbled.

Price gains last month were “broad-based, with continuing increases in the indexes for gasoline, food, shelter and apparel,” the Bureau of Labor Statistics said in its monthly report.

Food prices overall were up 0.5% last month after a 0.4% rise in July. Energy costs climbed 1.2% in August, though that slowed from a 2.8% jump in July.

Apparel costs were up 1.1% last month, used-car prices jumped 0.9% and medical-care services rose 0.3%.

The “core” CPI, excluding food and energy prices, rose 0.2% last month from the previous month, in line with economists’ forecasts. But that was a slight acceleration from July, and lifted the year-over-year core inflation rate to 2.0% -- the highest since November 2008.

The August price report “reinforces the view that the ‘soft patch’ in economic growth this spring has not alleviated the ongoing rise in headline and core inflation, despite a brief respite in energy and commodity prices,” said Michael Woolfolk, a currency strategist at Bank of New York Mellon.

The big question now: Is the CPI report enough to give the Fed pause before launching another monetary stimulus program to bolster the struggling economy?

Policymakers will meet Tuesday and Wednesday, and many on Wall Street are betting that the Fed will commit to a new plan of buying longer-term Treasury bonds to pull long-term rates in general lower. But more stimulus could further stoke inflation fears.

The yield on the 10-year T-note jumped to 2.08% Thursday from 1.99% on Wednesday. That could reflect doubts about a Fed stimulus move, or it could just indicate that some investors are moving out of Treasuries and into stocks, with the equity market up for a fourth straight day.

RELATED:

Unemployment benefit claims jump

Stocks rally as investors see hope in latest euro-zone aid plan

-- Tom Petruno

Photo: A grocery shopper in New York. Credit: Justin Lane / EPA

Consumer prices up 3.8% from a year ago, biggest rise since 2008

On a day when the Federal Reserve is busy working with other major central banks to keep the European financial system from imploding, the Fed got some bad news on the economic homefront: U.S. consumer prices were up more than expected in August, lifting the year-over-year inflation rate to the highest level in three years.

The Consumer Price Index rose 0.4% in August from July, seasonally adjusted. That was double the 0.2% rise that economists had expected in a Bloomberg News survey.

Measured from a year earlier the CPI was up 3.8% in August, the biggest year-over-year gain since September 2008 -- just before inflation pressures eased as the economy crumbled.

Price gains last month were “broad-based, with continuing increases in the indexes for gasoline, food, shelter and apparel,” the Bureau of Labor Statistics said in its monthly report.

Food prices overall were up 0.5% last month after a 0.4% rise in July. Energy costs climbed 1.2% in August, though that slowed from a 2.8% jump in July.

Apparel costs were up 1.1% last month, used-car prices jumped 0.9% and medical-care services rose 0.3%.

The “core” CPI, excluding food and energy prices, rose 0.2% last month from the previous month, in line with economists’ forecasts. But that was a slight acceleration from July, and lifted the year-over-year core inflation rate to 2.0% -- the highest since November 2008.

The August price report “reinforces the view that the ‘soft patch’ in economic growth this spring has not alleviated the ongoing rise in headline and core inflation, despite a brief respite in energy and commodity prices,” said Michael Woolfolk, a currency strategist at Bank of New York Mellon.

The big question now: Is the CPI report enough to give the Fed pause before launching another monetary stimulus program to bolster the struggling economy?

Policymakers will meet Tuesday and Wednesday, and many on Wall Street are betting that the Fed will commit to a new plan of buying longer-term Treasury bonds to pull long-term rates in general lower.

The yield on the 10-year T-note jumped to 2.08% Thursday from 1.99% on Wednesday. That could reflect doubts about a Fed stimulus move, or it could just indicate that some investors are moving out of Treasuries and into stocks, with the equity market up for a fourth straight day.

RELATED:

Unemployment benefit claims jump

Stocks rally as investors see hope in latest euro-zone aid plan

-- Tom Petruno

Photo: A grocery shopper in New York. Credit: Justin Lane / EPA