Landlords plan further legal battle against Skipton and BoI

Landlords plan further legal battle against Skipton and BoI

The Property118 Action group is seeking to challenge the Skipton over its apparent ‘abandonment’ of a contractual commitment to cap their standard variable mortgage rates at 3% over the Bank of England Base Rate. It is also planning legal action against the Bank of Ireland on its decision to add a premium to tracker rate mortgage margins.

The group, led by property investor Mark Alexander, has launched a crowdfunding campaign to raise the money needed to bring such cases to court.

Last month, the Property118 group won a Court of Appeal case against the West Bromwich Building Society, after some 6,000 buy-to-let borrowers were affected by a rate hike on tracker mortgages, despite no change to the linked Bank Base Rate. The landlords’ success has prompted the group to campaign for cases against the Skipton and BoI to be reopened.

On the group’s crowdfunding page, it said: “In March 2013, Bank of Ireland raised tracker rate mortgage margins. Over 13,000 borrowers were affected. Many of these originally took mortgages with Bristol & West which was taken over by Bank of Ireland. Two barristers and one QC provided written opinion that they believed the bank were [sic] in breach of contract.”

It added that providing funding for legal action was a struggle for borrowers at the time without the support of Property118, which wasn’t then in existence, and the Financial Ombudsman ruled in favour of the bank.

But a spokeswoman for the Bank of Ireland said The West Brom case was not comparable to the one currently being brought against it.

“Bank of Ireland’s offer document and mortgage terms and conditions expressly stipulated that the tracking margin or differential could be varied, and the Offer and Mortgage Conditions documents are consistent allowing for the differential to be lawfully changed.”

Additionally, Property118 said around 135,000 borrowers were affected by changes to the Skipton’s contractual agreement. FOS also ruled the lender was within its rights to make the changes.

Skipton said its position on the matter was unchanged since the verdict made by the Ombudsman.

“Skipton remains firmly of the opinion that under the terms and conditions of its mortgage offer it lawfully had the right to remove the standard variable rate ceiling that applied until 1 March 2010,” it said.

“The recent decision of the Court of Appeal in the Alexander v West Bromwich Mortgage Company case was very fact specific regarding an inconsistency in mortgage documentation. No such inconsistency can exist with Skipton’s documentation because the relevant key terms were very clearly and fairly laid out in only one document, being the mortgage offer.”

Landlords win Court of Appeal case against West Brom

Landlords win Court of Appeal case against West Brom

The ruling delivered today against the building society will see some 6,000 borrowers receive a refund, the Telegraph reported.

Borrowers will be collectively reimbursed £27.5m, while the lender has also agreed to re-set mortgage rates at a lower level. The decision to reimburse will see the lender make a loss for the year to March 2017, it said.

A ruling in January last year saw the High Court deliver a judgement in favour of the West Brom, with Mr Justice Teare stating that the lender was within its rights to increase the premium on the rate it charged above Base Rate.

Tracker mortgages contain a clause allowing lenders to change the mortgage interest rate under certain circumstances. With no rise in the Bank Rate of 0.5% since 2009, West Brom had argued that its savers had suffered a dramatic fall in income due to lower interest rates, leading the lender to “act accordingly”.

However, the Court of Appeal ruled that the relevant clause was inapplicable in such cases.

Some 350 landlords, led by property investor Mark Alexander of Property 118 Action Group, also complained that the letter sent to borrowers in September 2013 contained a “veiled threat” that West Brom would call in the mortgages with 30 days’ notice if they were deemed to be unprofitable.

The Court of Appeal agreed that the building society was not entitled to call in the loans at such short notice.

Alexander said: “This ruling sends a clear message to other lenders who have acted in a similar manner, and to those who might have been considering following suit.

“There are thought to be in the region of one million tracker buy-to-let mortgages which could have been affected in this case had gone the wrong way.”

Responding to the ruling, the West Brom said it was “disappointed” but accepted the Court of Appeal’s decision.

Jonathan Westhoff, chief executive, said: “At all times we acted to ensure we were treating customers fairly and that our approach was in the best interests of the society and its members as a whole.

“We will now contact all affected borrowers and ensure we process promptly any reimbursement they are due. In line with our prudent approach to managing the society we had already allocated capital to cover this unexpected outcome and so the Society remains in a strong financial position.”

Landlords battling HMRC over tax relief changes ramp up legal fight

Landlords battling HMRC over tax relief changes ramp up legal fight

Following the launch of their legal case in February, private landlords Steve Bolton, founder of Platinum Property Partners, and Chris Cooper, have set out to raise a further £250,000 to take their fight to court.

The pair want HMRC and the Treasury to abolish the ruling, set to be phased in from 2017, which will see individual landlords taxed on their turnover rather than profit as the right to deduct mortgage interest is taken away. At the same time, the maximum amount of tax relief which can be claimed by landlords on their mortgage payments will be reduced from 45% to 20%.

Blair’s law firm, Omnia Strategy, is challenging the ruling on the grounds it is a breach of individual landlords’ human rights because they are being treated differently to their corporate counterparts.

To launch the legal case, Bolton and Cooper, appealed for donations through the crowd funding platform, Crowd Justice. They raised £50,000 in eight days. The campaign page, ‘Tenant Tax’, has been reopened as they attempt to raise the next slice of funds needed to progress the campaign.

Bolton believes that if the tax changes go ahead unchecked, those landlords affected most severely will either sell up, reducing the stock of rental properties, or hike up rents to remain profitable.

“The days where ‘nobody loves a landlord’ must come to an end,” said Bolton. We need to unite to show that we will not accept the victimisation of landlords and tenants by the out of touch political elite.”

He added: “The Tenant Tax is wrong on every level and if we allow a normal business expense to become a taxable expense for landlords, who will be next; corporate landlords, shopkeepers, small business owners or anyone who has used finance to help expand their business?”

The campaigners are holding an event, Tenant Tax Summit – Landlords Fight Back, on 9 June at the ILEC Conference Centre in Earls Court. The event is being supported by firms with interests in the private rental sector such as, Shawbrook Bank and Propety 118.

Payday loans, footballers and proc fees – The Mortgage Solutions Quiz

Payday loans, footballers and proc fees – The Mortgage Solutions Quiz

What was the name of the payday loan website which was forced by the Advertising Standards Authority to remove its ad for short-term loans displayed in the run up to Christmas?


A) Payday Pig
B) Rudolph’s Readies
C) Santa’s Saver 


To read the full story click HERE

Correct answer: B) 

More than 100 footballers face financial ruin due to accusations from HM Revenue and Customs of what it has said is unpaid tax. What were the so-called tax avoidance schemes that the footballers were involved with?

Football penalty

A) Film industry

B) Tobacco

C) Biotechnology


To read the full story click HERE

Correct answer: A)

The High Court backed West Bromwich Building Society this week ruling that it was within its rights to increase the premium on a number of its tracker mortgages rates, despite there being no change in the Bank Base Rate. But what did West Brom increase rates to?

Judge's gavel

A) 3.99%

B) 4.99%

C) 3.49%


To read the full story click HERE

Correct answer: A)

Which UK region witnessed the biggest drop in house prices in December according to Land Registry figures?


A) West

B) East Midlands

C) North West


To read the full story click HERE

Correct answer: B)

Which lender increased its procuration fees for brokers this week?


A) Clydesdale Bank

B) Leeds Building Society

C) Woolwich


To read the full story click HERE

Correct answer: A) Clydesdale Bank

Congratulations you have completed The Mortgage Solutions Quiz! Have a great weekend.

Concept image of yellow smiley face balls

Landlords lose West Brom tracker case

Landlords lose West Brom tracker case

The case saw over 360 landlords bring their claim against the West Brom for upping tracker rates on 6,700 deals in December 2013 by 1.5% to 3.99%, while the Bank of England Base Rate remained static.

Delivering his judgement, Mr Justice Teare ruled that the lender was within its rights to increase the premium on the rate it charged above the Base Rate. He also said West Brom had the right to call in mortgages with 30 days’ notice.

In a Mortgage Solutions analysis piece on the issue, founder of the website Property 118 Mark Alexander, who grouped together landlords to launch a class action against the lender, said a victory for West Brom could badly damage business for landlords and owner-occupiers.

Following the court’s judgement, Alexander said he was “extremely disappointed” with the outcome and planned to appeal the case.

In a statement on the Property 118 website, Mark Smith of Cotswold Barristers who represented the landlords said: “The borrowers that I represent believed that they were protected from the risk of the financial needs of the lender resulting in an increase of the rates they paid by virtue of their contracts being ‘tracker’ mortgages.

“There will be a significant number of negligence claims against brokers and solicitors for failing to advise that the true meaning of the contract the borrower signed was that the lender’s obligation to track the reference rate could be dispensed with; that in effect there is no meaningful distinction between tracker and standard variable rates so far as the power of the lender is concerned,” he added.

“There may also be mis-selling claims arising from the publicity that WBBS and its group promoted, which stated that tracker mortgages gave the ‘certainty’ of knowing that the rate would move in line with the Base Rate, when this was not the case.”

West Brom increases tracker rate for 6,700 borrowers; sparks fears other lenders will follow suit

West Brom increases tracker rate for 6,700 borrowers; sparks fears other lenders will follow suit

The mutual has written to a quarter of its buy-to-let borrowers telling them rates on their mortgages will rise in accordance with terms and conditions in their contracts. In particular, it has referred to a clause stating the rate may be varied to reflect market conditions and ensure the business is carried out prudently, efficiently and competitively.

The news comes four months after the Bank of Ireland hiked rates for 13,500 tracker mortgage borrowers. Landlords have warned the action could be copied by other lenders.

Property 118 founder Mark Alexander, who is leading landlords in a class action against the Bank of Ireland rate rise, said: “The important thing now is to get everybody to fight one test case against the Bank of Ireland because it is clear other lenders are following suit.

“We need to fight and win one test case. Six months ago it was the Bank of Ireland, now it is West Brom – who will be next?”

Letting Focus founder David Lawrenson said other lenders would be watching the situation: “I have seen get out clauses in small print on other mortgages. It goes to show that borrowers should read the small print very carefully.”

The West Brom’s decision raised questions about the way mortgages were marketed on online comparison sites, he added: “If there are lots of get out clauses, should it be included under a lifetime tracker?”

Affected West Brom borrowers, who are all landlords with multiple properties, have until the end of March 2014 to repay or move their mortgage without facing exit fees. The mutual estimates the rate hike could generate up to £15m in extra revenue per year.

A West Brom spokesman said: “These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively.”

Landlords plan class action against Bank of Ireland

Landlords plan class action against Bank of Ireland

A hundred landlords and a coalition of landlord bodies including Landlord Action, the Good Landlord Campaign and members of the network Property 118 are preparing to launch a class action on the basis that whilst there may be explicit terms in the mortgage document allowing the bank to increase the margin, this clause is inherently unfair.

Following a meeting with a barrister early next week, a second round of recruitment to the class action is expected, with residential as well buy-to-let borrowers encouraged to join.

Alexander told readers of a discussion forum on the rate rise he had recruited a Landlord Action litigation solicitor: “Landlord Action has always fought for the rights of landlords and hates to see landlords being bullied by the government and banks. They are in court every day on behalf of landlords and they agree something needs to be done.

“Landlord Action has a team of legal professionals who will be able to assist in bringing a class action on behalf of landlords against the Bank of Ireland.”

In a cautionary note for advisers, the solicitor, Justin Selig, said a second option for affected landlords was to bring a claim against a solicitor or broker for failing to highlight the terms at the time the mortgage was taken out.

One contributor to the forum thread, Alastair Nicholls, said: “I also suggest that everyone files a complaint to the intermediary who sold the Bank of Ireland mortgage to them for mis-selling. We thought we bought a base rate tracker product, not something where the Bank of Ireland could make up the interest rate whenever they felt like it.

“That ability of the Bank of Ireland was never explained by the intermediary; hence it was mis-sold.”

Alexander replied on the thread: “I don’t recommend registering complaints with intermediaries at this stage. We need them on our side, the last thing we need right now is more enemies.”

On 28 February, Bank of Ireland doubled its tracker rate for 13,500 buy-to-let and residential customers and has subsequently attracted criticism from the chairman of the Treasury Select Committee, Andrew Tyrie.