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DIY bunglers risk reducing property’s value

0 Comments | Herald, The; Glasgow (UK), May 1, 2010 | by name 123 title 777

THOUSANDS of Britons have carried out home improvements in the hope of boosting the value of their property, but many may actually have reduced it, says an insurer.

Around 27% of homeowners admit they have undertaken electrical jobs without professional help, while 22% have attempted plumbing work, and 9% have tried their hand at structural improvements, such as removing walls.

A further 6% have even tried to carry out major building work themselves, such as a loft conversion, while 3% have tackled potentially dangerous gas repairs, according to LV=.

But the group warned that while many homeowners had carried out the improvements in the hope of increasing the value of their property, if the work was done badly it could actually reduce a home’s value by as much as 5%.

John O’Roarke, managing director of LV= home insurance, said: “With house prices falling or stagnating in some parts of the UK, it’s understandable that many homeowners should try to bump up the value of their properties through DIY home improvements.

“Not only could bungling these jobs be dangerous, and costly to put right, but if they caused a serious problem it could invalidate the home insurance cover.”

Even if the work is done well, homeowners are likely to be disappointed with the impact it has on the price of their property. A fifth thought redecorating would add most value to their home, followed by 14% who thought refurbishing the kitchen would do so, while 12% thought improving the garden would have the most impact on their asking price and 6% rated replacing the bathroom.

But seven out of 10 estate agents said redecorating would make no difference to the value, while 64% believed the same about landscaping the garden. One in five estate agents also thought a new kitchen would have little impact.

Instead estate agents thought structural work, if done well, was most likely to boost a property’s value, with a good loft conversion likely to increase the asking price by around 8%.

But even then, they warned homeowners were unlikely to recoup all the money they had spent on having it done.

Opinium Research questioned 2,012 people in March and PCP Research questioned 205 estate agents in March.

Payday lenders fear federal rules

0 Comments | Chattanooga Times Free Press, Jun 21, 2010 | by Flessner, Dave

By Dave Flessner

dflessner@timesfreepress.com

In more than 2,000 pages of legislation, payday lending is not mentioned in either the House or the Senate bills on financial reform.

But companies that provide short-term, cash-advance loans such as the Cleveland, Tenn.-based Check Into Cash still feel threatened by the revised financial system regulation working its way through Congress.

“Payday lending has been a very profitable business, but the problem is with the stroke of a pen Barack Obama can wipe out the whole industry,” said Gary Rivlin, a financial writer who just released a book on payday lenders and related industries titled “Broke USA.”

Payday lenders dodged the bullet when Congress rejected proposals to cap interest rates or to adopt a federal law on the number of payday loans an individual may take out each year.

But legislation being hammered out this month by congressional conferees includes provisions for a new federal consumer protection agency that could write regulations to control or possibly curb payday lending altogether. The House version would create an independent consumer protection agency to oversee almost all types of credit. The Senate version would put the bureau of consumer protection under the Federal Reserve Bank.

“This could be a brand new federal agency with almost unlimited autonomous power,” said Jabo Covert, a vice president of government relations for Check Into Cash. “At a time when the American people want to see the federal government spend less, do less and be a little more responsible, they are talking about creating a massive new federal bureaucracy.”

Critics of payday lenders insist that such lenders shouldn’t be exempt from the consumer protections required of banks or other conventional lenders.

“In this final stretch, we hope lawmakers will resist efforts to water down the bills’ strong provisions,” said Kathleen Day of the Center for Responsible Lending, a North Carolina consumer group that denounces payday loans as “legalized loan sharking.”

BIRTH OF AN INDUSTRY

A payday loan, also called a paycheck advance, is typically a two- to three-week loan of $100 to $400 borrowed against a person’s next paycheck. The borrower pays a fee — no more than $30 for each payday loan in Tennessee — to cover the expense of the loan.

The annual percentage rate for a two-week payday loan of $100 with a $15 fee amounts to 390 percent. But payday lenders insist what they charge is a loan fee, not an interest rate, and payday loans are usually cheaper than penalties charged for bouncing a check because of insufficient funds or late payments on many bills or overextended credit cards.

Allan Jones, the Cleveland, Tenn., founder of Check Into Cash whom Mr. Rivlin calls “the father of the payday lending industry,” insists the annual percentage rate calculation doesn’t make sense for loans of only two weeks.

“You don’t sell salmon for $14,000 a ton; you sell it for $7 a pound,” Mr. Jones said.

The payday lending industry got much of its early growth in Cleveland, Tenn., from industry pioneers Mr. Jones and Toby McKenzie, who started the company that became Advance America Cash Advance. Mr. Jones’ Check Into Cash is now the largest privately owned payday lender with more than 1,100 locations, while Advance America is the biggest payday lender with revenues last year of nearly $650 million from its 2,587 outlets.

In the industry’s early years, payday lenders such as Mr. Jones realized profit margins of 20 percent or more, Mr. Rivlin said, encouraging payday lending outlets to proliferate in storefronts around the country. As banks and credit unions shied away from small loans, payday lenders made getting quick cash advances more convenient.

“A banker wants 100 clients worth a million dollars, but the payday lender wants a million clients worth $100,” Mr. Rivlin said.

From their start around 1990, the number of payday outlets grew by 2006 to top 24,000 storefronts, or more outlets than McDonald’s and Burger King have restaurants, Mr. Rivlin said.

At least 10 million Americans take out a payday loan every year and collectively the industry lends nearly $40 billion in short-term loans, Mr. Rivlin said.

MATURING INDUSTRY

The recession may have put more people in need of short-term loans, but payday lenders also have been hurt by the economic downturn. To get a payday loan, you have to have a job or other regular source of income and you have to have a checking account.

As competition among payday lenders proliferated and states began to limit their activities, the number of payday storefronts has dropped by more than 2,000 across the country in the past three years, including the closing of more than 100 Check Into Cash outlets. The Center for Responsible Lending said 15 states have adopted legislation to restrict or outlaw payday lending through usury limits or other fee restrictions.

The payday industry’s trade group, the Community Financial Services Association in Washington, D.C., contends that payday lenders already are regulated strictly in the 34 states where they operate