Nationwide – another West Brom?

by Readers Question

8:55 AM, 15th November 2016
About 2 years ago

Nationwide – another West Brom?

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Nationwide – another West Brom?

Following the hugely impressive decision in West Brom (well done Mark and team!), I’ve been looking into the position regarding my Nationwide mortgage. This started off as a tracker residential mortgage with Portman in 1996. I moved in 1998 and applied for, and was granted, consent to let.Nationwide

Portman applied a 1% loading to the mortgage. Portman was subsequently taken over by Nationwide.

In 2014, Nationwide applied an additional 1.5% ‘letting charge’ on the basis of the ‘change of use’ of the property.

This seems to be inline with the West Brom case. Further, I do not consider that there was a ‘change of use’ in 2014 (as the property changed the use in 1998 and had been let since).

Nationwide do not see it like this. Neither does an adjudicator at the FOS. They both take the view that the West Brom case is different as it was a buy-to-let mortgage. To my mind, this makes no difference.

I am now inclined to discontinue the FOS process as it appears to be an ill-informed view and pursue the matter in Court. Before I do that, I would appreciate any thoughts or whether anyone is aware of any other actions against Nationwide.

Thanks!

KEG



Comments

Neil Patterson

9:04 AM, 15th November 2016
About 2 years ago

Hi KEG,

The contract, paperwork and revisions to your mortgage will need looking at very carefully.

I am assuming this was originally a residential mortgage contract and that this has not changed product? Therefore, you are still reliant on consent from the lender to let your property otherwise you will be in breach of your mortgage contract?

You have therefore in some way changed the terms of the contract and this is likely to have some effect (not certain) on what the Nationwide can do. Therefore you need to ascertain what affect this has had before going the massively expensive legal route.

Plus it is also possible with my many assumptions, and correct me if I am wrong, that the Nationwide could just withdraw their consent to let and force you to repay your mortgage.

Is this something you have already looked into?

Tozer G

13:52 PM, 15th November 2016
About 2 years ago

Hi

Thanks for that. Some clarifications:

Yes, it was residential. However, at the time of the original consent to let (1998), Portman levied a 1% loading. They subsequently (despite it constantly being let) applied another 1% charge in 2014 on the basis of a "change in use". My argument is that there was NO change of use and that they cannot charge twice for the same "change of use".

I also took out a further advance in 2009 (separate account). Nationwide (which had by then taken over Portman) knew the property was let. However, the further advance also became subject to a "change of use" charge of 1% in 2014 even though the use of the property hadn't changed throughout the life of the further advance and, in my opinion, could not had had its use changed!

Other than that, the principles in West Brom seem to apply to an extent at least in that it was a tracker mortgage and the lender unilaterally increased the rate for, apparently, no real reason.

KEG

Neil Patterson

14:24 PM, 15th November 2016
About 2 years ago

Hi KEG,

The difference is West Brom had no legal right to unilaterally change the contract. However, this is far more complex as you have changed the contract yourself as well as the lender. You should also clarify if this is still under consent to let as you may be at risk from the lender pulling the rug out form under you.

I would tread carefully on this one as it could end up costing you money to fight it unless you know you are in the right for sure.

Tozer G

14:39 PM, 15th November 2016
About 2 years ago

Thanks again. To be honest, the risk of proceeding is not great as it would fall within the small claims court - hence even if I lost there would be no costs consequences.

My point in respect of the Further Advance is that I have not changed the contract at all. The change clause Nationwide is relying on states that the variation in rate can apply "to reflect a change in the way the property is used".

My argument is that:

a) Main mortgage - they did impose a charge. They cannot do so again.

b) Further advance - there was no "change in the way the property is used".

Glenn Ackroyd

11:51 AM, 19th November 2016
About 2 years ago

Hi, whilst the value of the claim might be within the remit of the smalls claim court, the lender's solicitors are likely to argue that given the wide reaching implications of the decision to other customers, the case should be dealt with outside the County Court small claims procedure, opening you up to costs.

I've had that tactic used against me in the past. At that point, my client had to fold, because the cost risks were too high.

Tozer G

21:03 PM, 19th November 2016
About 2 years ago

Reply to the comment left by "Glenn Ackroyd" at "19/11/2016 - 11:51":

Thanks. Good point. I'm guessing your point is under PD 26. I think my argument would be that the facts are not complex and are unique to me - it is simply a consideration of the documents in my particular case and that it is in the interests of justice for the case to be heard without costs consequences.

The alternative is to sit it out with the FOS which always seems like 'rough justice' to me as their interest in the specifics seems to be rather low.

Does anyone have any suggestion as to how I can obtain an impartial view as to whether my claim flies or not? I'm a solicitor (corporate) by profession but concerned that I should get a second opinion before the genie is released from the lamp.


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