Tag Archives: Buy to let

Barry’s story – it could have been you! Financial Advice, Landlord News, Latest Articles, Property News

Barry’s story was written by the Mark Alexander back in December 2010. It has since been updated and re-published several times. The dates, times and people are fictional but the story is based on real life events.

It’s a modern update of the classic “A Widow’s story”, this time written as a cautionary tale for landlords and their families.

Barry is 53 years old and married to Sharon. They have three teenage children; twin girls aged 15 and a 13 year old son. Barry worked as a self employed salesman in the plant hire business. Sharon had a part time secretarial job in a local school.

Barry and Sharon purchased their first investment property in 1996.

As property values have risen they have continuously remortgaged and used a proportion of the equity released as deposits to purchase additional rental properties. They also saved a proportion of the equity released for a rainy day. To accelerate the growth of their portfolio Barry and Sharon raised extra cash for deposits by remortgaging their home. The profits from Barry’s plant hire business covered the family’s commitments comfortably.

They had accumulated a portfolio of 23 properties with a combined valuation of £1,650,000, against which they had mortgages of £1,400,000.  The portfolio produces rental income of £87,000 per annum. Their rainy day fund amounted to just over £64,000. By having all of the above in place you might be forgiven for thinking that they had set themselves up with a very safe future.

On Sunday 21st December Barry had a bad day. He was on the way home that evening having just been out to fix a tenants leaking shower tray when the traffic on the M6 came to a grinding halt. Barry managed to stop his car, avoiding the lorry in front of him, but the car behind him ploughed into the back of him, wedging his car under the back of the lorry.

The emergency services managed to free Barry from the wreck and his only damage was shock, whiplash and major bruising to his legs. However, two days later Barry collapsed whilst out shopping for last minute Christmas presents. He was rushed to hospital where it was discovered that a blood clot in Barry’s leg had passed to his brain. Barry had suffered a major stroke.

He lost his speech and most of the use of one side of his body. The family were in tatters. Sharon had to give up work to care for him.

Up until having a stroke Barry had managed the property portfolio and taken care of most of the maintenance himself. Could Sharon care for her husband, her family and the management and maintenance of the property portfolio too?

They considered putting the properties on the market but soon realised that after deducting selling costs and CGT there wouldn’t be much money left over. They would also lose their income and they would be leaving their tenants in a difficult predicament too. Sharon has had to employ a lettings agent to manage the portfolio. Since then it has cost the family an average circa £3,000 a month to pay for ongoing maintenance and management.

Fortunately there has been some good news, at least financially. First, low interest rates have meant that Barry and Sharon’s mortgages have got much cheaper than when they started their property rental business. Many of their mortgages have reverted to tracker products due to their fixed rates coming to an end. They are focussing on Barry’s recovery. What will happen when interest rates go back up again though? How will the restrictions on finance cost relief for individual landlords affect them?

The real saviour for the family has been insurance. Fortunately, Barry and Sharon were astute enough to insure against these eventualities. They took out life assurance policies that pay out a regular monthly income right up to Barry’s 65th birthday. These policies were written on the basis that they also pay out in the event of a critical illness. The family are therefore confident that these provisions will see them through these troubled times and out the other side. They will then revert to plan A, which was to live off surplus rental income over and above the mortgage payments on their portfolio or to sell the properties and live off their gains.

What insurance provisions have you made for your family?

How are you investing the windfall of increased cashflow that record low interest rates have produced for your family?

Have you made similar provisions to Barry and Sharon?  If you haven’t it may not be too late, we want to help.  If you have already taken advice and put insurances into place we would like to introduce you to one of our recommended advisers to review your policies and ensure they are competitive. Most important of all, to ensure that the right person gets the right money at the right time.

FOS rule West Brom Tracker Rate Hike is fair Advice, Landlords Stories, Latest Articles, Legal, Mortgage News, Property Investment News, Property118 News, UK Property Forum for Buy to Let Landlords

The FOS (Financial Ombudsman Service) have done it again! FOS rule West Brom Tracker Rate Hike is fair

In the past the FOS have controversially agreed that rate hikes applied by Bank of Ireland, Skipton Building Society (Amber Homeloans) and also the Danske Bank (formerly National Irish Bank) were fair. Therefore, is it really that shocking that FOS would also rule in favour of West Bromwich Mortgage Company?

Following a judicial review in the case of Millar & anor -v- Financial Services Ombudsman [2014] IEIC Mr Justice Garard Hogan recently ruled that the Irish FOS were wrong in their contractual interpretation in a rate hike case that the Millars brought against Danske Bank [source1].

This supports the Property118 members’ lack of confidence in the UK FoS decision making process, and hence the decision for Property118 to raise funds to enable their members legal team to stand toe to toe on 21st January 2015 with the West Brom legal team at the Commercial Courts in the Rolls Building.

Property118 members have raised nearly £500,000 and these funds are set to grow as a result of people who complained to the FOS realising that Property118 were right all along to take a representative action to the Courts.

The National Landlords Association initially recommended its members to pursue the FOS route and await the outcome of that before considering legal action. Many of those who followed this advice are enquiring about joining the representative action organised by Property118 as a result of the FOS finding. **West Brom has indicated through its legal team that it will apply the finding of the Court across the board to all affected borrowers**, so all additional support to ensure the right result is achieved is essential.

The Property118 representative group are happy to welcome all who have received the FOS rejection letter. The same financial commitments to those who joined prior to the deadline will apply, plus a small price for the administration costs associated with Cotswold Barristers applying to the Courts to have the names of the newly represented participants added to the claim. A new deadline of 19th December has been applied, this will definitely be the final deadline for legal reasons.

Newcomers are interested in joining the fight in the full knowledge that sufficient funds have already been raised and that the case will be heard on 21st January 2015.

Each member has paid £1,000 into an escrow account held by BARCO (The Bar Council’s Escrow service) plus a further £500 to Property118 and Cotswold Barristers to cover legal costs and associated running and marketing costs of the campaign for each represented mortgage account. Some members have a dozen or more represented mortgages, most have one or two. In the event of the case being won the majority of funds will be returned, plus of course a refund of any over-payments to West Brom and the satisfaction of their terms being upheld as per the borrowers understanding of the tracker rate mortgage contracts they entered into.

Every newcomer to the Property118 reduces the financial exposure to the funds already raised on the basis that all costs are shared pro-rata to funds committed.

** Beware false promises! **

Back in 2009 the CEO of the Skipton Building Society went on record that they would honour an interest rate cap [source2] just one year before that promise was reneged upon [source3]. However, insufficient funds were raised to take the case to court and borrowers have been left high and dry by the FOS and the FCA who decided the rate hike was fair despite the promises made. Perhaps that’s why West Brom borrowers want the certainty of being represented in the Property118 vs West Brom Court case, whilst it is still such a cost effective option?

If you are affected, and are not already a member of the Representative Action, please complete the form below for more details on how to get involved.

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Innovative New BTL Mortgage Product Buy to Let News, Commercial Finance, Commercial Finance Broker Blog, Financial Advice, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies

85% LTV, low rates and fees AND positive cashflow on new BTL purchases?

Yes it’s true, and it’s available NOW!

The eagerly awaited collaboration between a market leading BTL mortgage provider and the UK’s only provider of BTL equity finance has now been launched – AT LAST!!!

BTL Joint Venture Funding For New Purchases Has Arrived

The resultant product allows landlords to purchase properties with a 15% deposit and pay interest only on a mortgage for just 65% of the purchase price for the next 10 years, and no monthly payments whatsoever on the remaining 20% of borrowed money. Imagine what that can do for cashflow!

The product only available to landlords with a portfolio of 5 or more properties.

How it works ….

YOU put in a deposit of 15% of the purchase price.

The mortgage lender provides a 70% LTV mortgage – interest only or repayment and at very competitive rates 🙂

You keep 100% of the rent to pay the mortgage interest and other costs relating to the property.

The equity financier provides the remaining 15% of the purchase price in return for 30% of the capital appreciation in 10 years time or when the property is sold, whichever is earlier. No payments are made to the equity financier until the loan is redeemed.

This is a fantastic deal for cashflow and also a superb way to protect yourself against risks associated with interest rate hikes when gearing up at higher levels.

Just think about it like this; you put in 15% of the capital and get 70% of the capital appreciation and 100% of any rental profit. The equity financier puts in 15% of the capital (the same as you) but only gets 30% of the capital appreciation and 0% of the rental profit. It’s a no brainer!

Low yielding properties stack up – even in London

As there are no payments on the equity loan the maximum lending based upon on rental income applies only to the mortgage element of your borrowing. Therefore, with this product it is much easier to make lower yielding properties stack up, even in London!

Exclusivity and confidentiality

At Property118 we know who both the lender and the equity financier are but we are sworn to secrecy as this is very much a pilot project. Nevertheless, I can give you my personal assurance that both the lender and the equity provider are big names in the buy to let market.

Obviously we want to make some money out of this too so we are charging a fee of for introductions to our panel of professional advisers for advice on this product. By charging for the introductions we, and the advisers we will be referring you to, recognise that only serious enquirers will progress matters. This is a good way to ensure that our advisers are not bogged down answering questions from time wasters and also provides a very a good reason for our recommended advisers to prioritise our referrals.

Our fee for arranging an introduction to a professional adviser, who will visit you to provide face to face advice if that is required, is £200, payable to Innovative Landlord Solutions LLP (the legal owner of Property118.com) either by credit/debit card or via PayPal. This fee is waived for clients of our Consultancy Service.


We have built a forecasting model which allows you to input all the variables you like into a Microsoft Excel spreadsheet and then compare this method of funding to taking conventional mortgages alone. The difference in profits over 10 years can be staggering, even after factoring in the shared appreciation. We are providing this forecasting model exclusively to people who use the referral service to our recommended professional advisers.

To be amongst the first to have access to this truly remarkable method of funding BTL purchases please complete the form below.

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Remember our background is in BuytoLet and Commercial finance Buy to Let News, Commercial Finance, Latest Articles

PartnersRemember our background is in BuytoLet and Commercial finance Mark, Mike and I met through the common background of BuytoLet and Commercial Finance. Over the years through The Money Centre and now Property118 we have literally helped 10s of thousands of Landlords, developers and investors start and grow their property businesses.

Unfortunately we are now old enough to have seen, done and bought the t-shirt for most things in the property finance industry including Mark and Mike being founder members of the NACFB (National Association of Commercial Finance Brokers) and working with Nationwide Building Society and Paragon Mortgages on the concept of Forward Buying Facilities.

We have been sharing our experiences and strategies for property finance as much as we can with readers, but there is always a time when you just need some help.

To start with we have our own BuytoLet mortgage sourcing system and calculator, which we designed ourselves and I keep updated. This will help you see how much you could borrow, what the costs would be and which are the most popular Lenders and Products.

We have a team of highly experienced NACFB member commercial finance Brokers who can advise you on and source the best Commercial, Development finance and BuytoLet deals.

If you need help with…

Buy to Let mortgages  : info@property118.com

Commercial Mortgages CLICK HERE

Development Finance CLICK HERE

Bridging Finance CLICK HERE

…. or guidance regarding property finance you can email us on : info@property118.com Call Property118 on: 01603 489118

Or contact me directly on npatterson@property118.com.

Buy to Let mortgage rates moving down not up with Virgin! Buy to Let News, Latest Articles

Despite the Press and politicians misreporting and misunderstanding Mark Carney’s (the Governor of The Bank of England) latest comments, Virgin Money have actually reduced their Buy to Let mortgage rates for lower Loan to Values.

Mr Carney did not say interest were definitely going up this year and Virgin Money are proving that point by today releasing their new product range revisions.

Two main niche criteria for Landlords that Virgin will assist with are remortgaging inside 6 months of the original purchase date (excellent for cash and auction buyers) and First Time Landlords.

Key changes to product rates are:

  • 2 year fixed rates have been reduced by up to 0.16%, with £1,995 fee products available from 3.25% at 60% LTV
  • 3 year fixed rates have been reduced by up to 0.50%, with £995 fee products available from 4.09% at 60% LTV
  • 5 year fixed rates have been reduced by up to 0.21%, with £1,995 fee products available from 3.95% at 60% LTV
  • 2 year trackers with £995 fee now start from 3.09% at 60% LTV

A £500 Cashback incentive is available across all BTL products. Fee Saver Options, where no product fee is payable, are available fixed rate products, but the interest rate is increased relative to the length of the term.

Products are stress tested at 5.99% notional rate and 125% interest cover meaning you can borrow a maximum of 160.26 times the monthly rental income.

To Search our Property118 Buy to Let calculator and quotation engine for a range of available market products please Click Here

If you would like assistance with any property finance requirement please complete the form below and we will give you a call back to discuss how we can help 🙂Buy to Let mortgage

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  • Please give us a few details so we can investigate and call you back


Rental Yields – Chart of the top 50 areas in England and Wales Landlord News, Latest Articles, Property News

HSBC has released a report showing the average rental yields for the top Buy to Let hotspots of England and Wales based on data from the Office of National Statistics (ONS) and Land Registry.

This information broken down to specific areas is valuable for Landlords looking for future property investments, giving a base line picture of what rental yields and incomes are achievable.

The figures show that in some areas private landlords already own more than 1 in 4 properties of the housing stock with Southampton being the highest yielding area on average.

The Top 50 Buy to Let Hotspots by Rental Yield are:

Location Percentage of Rental Housing Stock Average House Price Average Rent (Monthly) Average Rent (Annual) Rental Yield (gross)
Southampton 23.42% £138,311 £901 £10,812 7.82%
Blackpool 24.16% £75,943 £494 £5,928 7.81%
Kingston upon Hull 19.02% £69,519 £450 5400 7.77%
Manchester 26.85% £102,631 £650 £7,800 7.60%
Nottingham 21.64% £83,313 £524 6288 7.55%
Coventry 19.02% £104,970 £624 7488 7.13%
Slough 23.07% £171,581 £975 £11,700 6.82%
Oxford 26.11% £244,893 £1,375 £16,500 6.74%
Liverpool 21.75% £91,012 £498 5976 6.57%
Portsmouth 22.28% £141,971 £775 9300 6.55%
Cardiff 20.32% £140,882 £750 9000 6.39%
Cambridge 23.91% £179,699 £949 £11,388 6.34%
Southwark 22.22% £401,405 £2,058 24696 6.15%
Luton 21.27% £127,473 £650 7800 6.12%
Newham 32.62% £229,141 £1,126 £13,512 5.90%
Leicester 21.28% £112,226 £550 6600 5.88%
Bournemouth 28.21% £170,493 £825 £9,900 5.81%
Enfield 21.18% £261,163 £1,200 14400 5.51%
Brighton and Hove 28.04% £229,622 £1,049 £12,588 5.48%
Brent 28.82% £337,723 £1,517 £18,204 5.39%
Forest Heath 21.80% £179,699 £795 9540 5.31%
Torbay 21.43% £139,168 £598 7176 5.16%
Southend-on-Sea 20.72% £152,171 £650 7800 5.13%
Watford 18.89% £240,239 £997 11964 4.98%
Bristol, City of 22.11% £169,425 £695 8340 4.92%
Kingston upon Thames 21.04% £333,122 £1,363 16356 4.91%
Reading 24.68% £196,309 £795 £9,540 4.86%
Hounslow 22.23% £285,927 £1,148 13776 4.82%
Wandsworth 30.02% £428,987 £1,694 £20,328 4.74%
Lewisham 22.97% £283,031 £1,101 13212 4.67%
Shepway 20.17% £181,399 £695 8340 4.60%
Tower Hamlets 30.84% £364,296 £1,387 £16,644 4.57%
Eastbourne 21.65% £177,408 £675 8100 4.57%
Harrow 20.37% £306,381 £1,148 13776 4.50%
Croydon 19.83% £254,591 £949 11388 4.47%
Exeter 19.56% £187,680 £693 8316 4.43%
Isles of Scilly 20.63% £180,227 £654 7848 4.35%
Lincoln 19.36% £119,076 £429 5148 4.32%
Redbridge 21.63% £292,459 £1,049 12588 4.30%
Cheltenham 20.15% £170,573 £598 7176 4.21%
Ipswich 18.75% £153,163 £524 6288 4.11%
Richmond upon Thames 20.55% £485,496 £1,647 19764 4.07%
Westminster 37.56% £767,112 £2,578 £30,936 4.03%
Norwich 20.10% £179,699 £598 7176 3.99%
Camden 30.46% £646,043 £2,145 £25,740 3.98%
Hastings 27.19% £177,408 £550 £6,600 3.72%
Haringey 30.33% £372,278 £1,148 £13,776 3.70%
Thanet 21.96% £181,399 £524 6288 3.47%
Hammersmith and Fulham 30.05% £593,787 £1,690 £20,280 3.42%
Kensington and Chelsea 33.97% £1,090,943 £3,033 £36,396 3.34%

Broken down by the top 10 London hotspots:

Location Average Property Price Average Rent (Monthly) Rental Yield (gross)
1. Southwark £401,405 £2,058 6.15%
2. Newham £229,141 £1,126 5.90%
3. Enfield £261,163 £1,200 5.51%
4. Brent £337,723 £1,517 5.39%
5. Kingston upon Thames £333,122 £1,363 4.91%
6. Hounslow £285,927 £1,148 4.82%
7. Wandsworth £428,987 £1,694 4.74%
8. Lewisham £283,031 £1,101 4.67%
9. Tower Hamlets £364,296 £1,387 4.57%
10. Harrow £306,381 £1,148 4.50%

HSBC head of mortgages Peter Dockar said “house prices in the top-yielding locations, while still out of reach among many first time buyers are relatively affordable for landlords investing in property and the demand from young professionals has pushed up rents and driven up the returns. London is often seen as the haven of property investment with many believing the streets are paved with gold. However, while the highest rents in the country are an attractive draw for landlords, high house prices in the capital squeeze yields and limit the returns available. As a result returns can often be far more attractive in other areas so it certainly pays for landlords to do their research.”rental yields

Message from Anthony Wilson of Ashley Wilson Solicitors LLP Ask Me Anything, Buy to Let News, Guest Articles, Landlord News, Landlords Stories, Latest Articles, Legal, Mortgage News, Property Investment News, Property News, The GOOD Landlords Campaign

Anthony Wilson of Ashley Wilson Solicitors LLPMy name is Tony Wilson.

I have today committed £15,000.00 to the fund to enable Mark Alexander and Mark Smith carry on the superb work they are doing on behalf of buy to let landlords who are being (in my view) mistreated by the West Bromwich Mortgage Company.

As a solicitor who has been in private practice for over 25 years and specialising in property throughout that time I am appalled at the way in which West Brom have sought to justify their unilateral action and I believe it is entirely correct that we should pursue a collective representative action in the way advised by Mark Smith which limits the financial risk to all concerned while giving us a voice to remedy this injustice.

I have done my due diligence before parting with any funds and I am fully satisfied that the route suggested by Mark Smith and Mark Alexander with funds protected within the Barco account gives us all maximum financial protection.

I also applaud Mark Alexander for leading this campaign.. which clearly deserves maximum public exposure.

This is not the first time over the last five years when I have been subject to a financial institution taking unilateral action despite the terms of a written agreement on the artificial basis “that it cannot afford it.” This type of action needs to continue to be challenged … the compensation payments having to be made by such institutions are increasing all the time now that the “chickens are coming home to roost”.

I urge everyone who has been affected by the West Broms behaviour to stand up and be counted .. to provide the financial resources to give us the maximum chance of securing a positive result and to ensure that the decision makers at the West Brom who have been arrogant to enough to make this decision unilaterally without first seeking judicial sanction..are accountable to their members for their inappropriate conduct.

I believe that we will win.. but win or lose this behaviour needs to be challenged.

Tony Wilson (Anthony Ashley Wilson)

Follow Up Comment

Thank to everyone for their positive comments about my post…. in a way I actually feel privileged to be part of it when I consider all the hard work and commitment which has been put into this to date by Mark and others..it is encouraging to know that the fund is heading in the right direction.. . if anyone has any doubts.. I am happy to discuss with them direct why I decided to participate.

Editors Note

To read the response comments from other campaign members please click HERE

To view Tony’s member profile please click HERE

To find out how to get involved please complete the form below

The deadline for submission of instructions has now expired, sorry.


News Flash – 80% LTV available on New Build Flats!! Buy to Let News, Commercial Finance, Landlord News, Latest Articles

Ever since the Credit Crunch it has been very hard to finance new build flats on Buy to Let mortgages with lenders criteria either a straight No, or at a reduced Loan to Value.

However Aldermore commercial have now released new criteria allowing 80% maximum LTV on new build flats for individual, company applicants and Scottish borrowers 🙂

There is also no minimum income required, no maximum portfolio size and Ex-pats will be considered!Aldermore

Basic Criteria includes:

  • Loan size: Minimum £50,000 (Minimum £100,000 for HMOs and ex-pats)
  • Maximum £1,000,000.
  • Maximum age: 85 years at end of mortgage term.
  • No minimum income (applicants must have a verifiable income source.)
  • Non-homeowners or first-time landlords not accepted.
  • Minimum property value £75,000 for Standard Buy to Let property
  • Minimum property value £200,000 for HMO property (exceptions may apply).
  • Ex-pats will be considered. They must have evidence of UK buy to let experience (tax returns & SA302s); proof of UK citizenship; proof of residency abroad (not PO Box) within last three months; proof of residency in UK within last five years; proof of UK mailing address (not security address); provide a copy of overseas contract and proof of salary (last three months’ bank statements; and, have a UK bank account for rent payments.

Product Range for 80% LTV with a 2.5% arrangement fee starts at:

  • 3 year discount 5.29% reverting to LIBOR+5.00% stress tested at 125% of pay rate
  • 3 year fixed 5.79% reverting to LIBOR+5.00% stress tested at 125% of pay rate
  • 5 year fixed 5.99% reverting to LIBOR+5.00% stress tested at 125% of pay rate

If you need any help with a Buy to Let application you can call me on 01603 489118 or email npatterson@property118.com

Or if you would like to add your own requirements and search for the most popular available Buy to Let products please click here

Buy to Let Mortgage sourcing system and calculator

Buy to Let Mortgage sourcing system and calculator

Buy to Let may come under more scrutiny post MMR Buy to Let News, Landlord News, Latest Articles

The Mortgage Market Review MMR will come into effect on the 26th of April. The New MMR rules will force lenders to prove that borrowers can afford the monthly mortgage payments on their FCA regulated main residence loans.

This will involve much stricter proof on Full Fact Finds and applications showing monthly budget planners indicating borrowers can afford all their existing commitments on top of any new borrowing. This goes back to the old days when I started in Banking pre income multipliers and self cert when all loan applications contained a monthly budget planner (sensible I think).

The fear for Buy to Let is that with these stricter proofs required borrowers will be tempted to circumnavigate these rules by declaring a property purchase to be Buy to Let instead of their actual main residence. Hence they can take advantage of Buy to Let stress testing where the rental income has to cover the interest only loan payments by 125% instead of proving their earned income can cover the full mortgage payments.

This is obviously wrong as there is in fact no actual rental income and the lenders contract states the borrow can not live in the property without  permission or moving the mortgage. Hence borrowers will be in breach of contract, have no FCA protection and be liable to repossession.

A FCA spokeswoman said, “lenders who are currently offering buy-to-let products need to be alert to the potential of borrowers or brokers attempting to get around MMR rules and have systems and controls in place to prevent this from happening. It is one of the areas we will be looking at when we undertake our post-implementation review.”

In a recent Mortgage Strategy poll 53% of mortgage brokers said they had a client try to take out a Buy to Let instead of a regulated main residence loan even though they knew they would be living in the property!

At Property118 we know from past readers questions asking for help that they are many people now either renting out their main residence or living in their Buy to Let without telling the lender. This is bad for Landlords as a whole as it could potentially impact on lenders willingness to lend to Landlords or stricter criteria.MMR

Therefore it could be beneficial for the PRS that Lenders and brokers are more vigilant in stopping these false applications becoming more common place post MMR.

If you need any help with a Buy to Let application you can call me on 01603 489118 or email npatterson@property118.com

Or if you would like to add your own requirements and search for the most popular available Buy to Let products please click here

Buy to Let Mortgage sourcing system and calculator

Buy to Let Mortgage sourcing system and calculator

Property118 Members vs West Bromwich Mortgage Company Advice, Buy to Let News, Cautionary Tales, Favourite Articles, Financial Advice, Landlord News, Landlords Stories, Latest Articles, Legal, Mortgage News, Press, Property Investment News, Property Investment Strategies, Property News, Property118 News, UK Property Forum for Buy to Let Landlords

UPDATE – 31st March 2014

Since publishing this article our campaign has raised over £450,000 and legal action has now commenced. The official closing date for borrowers to be represented in this action was 28th March 2014. However, it may still be possible to be included in the representative action by paying additional fees to cover administration and Court fees to be added to the list of represented claimants. For further details please Contact Carla Morris-Papps at Cotswold Barristers – telephone 01242 639 454 or email carla@cotswoldbarristers.co.uk

West Brom Tracker Mortgages

Property118 Members vs West Bromwich Mortgage Company

Property118 Members vs West Bromwich Mortgage Company

Borrowers representing 84 mortgage accounts affected by the West Bromwich Mortgage Company 1.9% rake hike to their tracker rate mortgage margins attended a secret meeting of paid up campaign members on 27th February 2014. At that meeting it was confirmed that 420 affected mortgages are currently represented by the campaign group.

Property118 had previously created a secure forum for paid up members of the group to discuss various legal strategies, one of which was a proposal to West Brom to consider arbitration as an alternative to Court action. Each member had paid £240 for each affected mortgage plus a contribution to a campaign marketing campaign.

Arbitration was proposed for tactical legal reasons which were explained by the groups advisers, some details of which must remain confidential for legal reasons.

This would have been significantly quicker and cheaper for all concerned and had massive upsides to West Brom in that the outcome would be confidential. In other words, if West Brom had lost the case, nobody would have “officially” known about it other than those who had already paid to be a member of the campaign group. This would have meant the worst case scenario for West Brom would be losing no more than 10% of their reported £19 million of additional annual profits from this rate hike.

West Brom refused!

This refusal now plays very nicely into our hands for litigation purposes as it will be frowned upon by the Courts, especially if we lose our case and end up having to pay costs associated with the David and Goliath battle. 😉

The attendees of the meeting voted unanimously to proceed immediately with litigation on the basis proposed by (Mark Smith – Barrister-At-Law) as explained below. Thanks were offered to Justin Selig and his team at The Law Department for his sterling work to date in helping us get to this position. Without their help our campaign may never have got this far.

Litigation will commence during the week of 31st March 2014 with the service of Court Papers. This provides a final opportunity for any remaining affected borrowers to commit to the action by Friday 28th March.

We already have more than double the necessary funds on account to pay our own legal team. Mark Smith has agreed to represent borrowers for a fixed fee of £120 + VAT per affected mortgage subject to there being at least 250 borrowers committed. Further details in his Terms of Business and Instruction letter which can be downloaded by completing the form at the bottom of this page.

Existing campaign members are also reminded that they MUST complete and return the instruction form  to Mark Smith to act for them and the required additional funds by 28th March 2014.

Oops! We could not locate your form.

Costs Funding

The primary concern of existing members that had to be overcome was their potentially unlimited liability to the West Brom’s legal costs in the event of losing the case and the “open cheque book” often associated with legal cases. It was agreed that all fears could be overcome by creating a fund to be held in a BARCO escrow account (BARCO is the Bar Council – the regulators of Barristers). This account will provide evidence to the Courts that we have sufficient funds on account to settle the other sides costs in the event of losing the case and having an adverse costs order awarded against the group.

The first step of the legal action will be a costs hearing, as part of a “Case Management Conference”. This is where both sides must submit their costs budgets for the case to the judge and where the judge decides upon reasonableness. If either side fails to do this then the maximum they can claim for costs against the other side is the Court fee, i.e. £175! It is extremely rare for judges to award costs in excess of the agreed costs budget.

Our estimate is that based on the number of affected mortgages being represented, and the possibility of more people now wishing to be represented at this stage, the BARCO account could contain as much as double the other sides costs budget. This is why we are so confident about costs not exceeding the amount of funds that will be held in escrow. In the extremely unlikely event of the groups funds being insufficient to meet a potential costs order the group would have an opportunity to withdraw their case and settle the other sides costs to date.

If/when we win, the contents of the BARCO account will be rolled over to deal with all of the costs associated with the inevitable appeal case and if/when that is won the funds will be returned to members. If we lose, the contents of the escrow account will be used to pay costs awarded to West Brom and the balance of funds will be returned pro-rata to members.

The case will be fought on the basis of a representative action. This means that the ruling of the Courts will only apply to those borrowers who have paid to be represented in the case. There will be no free rides!

We fully appreciate that some affected borrowers will not be able to raise the necessary funds in time to be part of this action so there is a Plan B. Affected borrowers who are not represented may have another opportunity to make claims in a few years time. In the meantime they will continue to pay the higher rate and will probably be expected to forfeit any refund of overpayments in return for a no-win-no-fee arrangement. This could be a far more expensive option, hence the reason why so many affected borrowers are so keen to be part of the imminent legal action.

The legal strategy and process we are undertaking will be a very simple one. There will be no witnesses called so there will be no surprise twists such as those often seen on TV where a new witness or new evidence appears at the last minute. On this basis, we anticipate the case, including any appeal, to be concluded before Christmas.

We will only be asking the Courts to rule on two things:-

1) Based on the documentation produced by West Brom, do they have the right to increase the tracker margin?

2) Based on the documentation produced by West Brom, do they have the right to call in loans within 28 days without the borrower being in default?

There has been lots of discussion about whether West Brom did or did not provide all of the documentation they are now relying upon. This is not relevant to our case.

There has also been much discussion about Unfair Terms in Consumer Contract Regulations; again this is not relevant to our case.

It has been questioned whether in fact the mortgages issued by West Brom were indeed trackers, this cannot be denied by West Brom as this is the basis they report them to the rating standards agencies – see this link

The agreed level of funds to be deposited into the BARCO account is £1,144 per affected mortgage being represented. For example, somebody wishing to have 10 affected mortgages represented will need to deposit a further £11,440 into the BARCO account. Existing members will receive a refund of unused funds which they paid into the client account of The Law Department. New members will need to pay an additional premium of £356 per mortgage to the Property118 marketing fund to equalise the financial contributions and efforts of the forerunners of the group.

Therefore, the net payment per affected mortgage for members will be:

  • For existing members who have already instructed The Law Department £994 (assuming a refund of £150 per affected mortgage from The Law Department)
  • For new members the total cost per mortgage to be represented will be £1,500

We have created a simple set of instructions explaining how much you need to pay and who you need to pay it to here >>> http://www.property118.com/simplified-payment-instructions-join-west-brom-action/

Remember, if/when we win you will get more than this amount back when you also factor in 100% of the extra 1.9% interest you have been paying which will also be refunded. The worst case scenario is that you will get none of this money back if we lose. If you can live with that you should proceed.

The reason we have chosen this strategy as opposed to buying ATE insurance is that it costs us much less if we win. We are in this to win this. The above strategy means that we all know what we stand to lose and can proceed with our eyes wide open, confident that our liabilities are limited.

If the balance of the BARCO account associated with this action is less than £250,000 by close of business on Friday 28th March 2014 the legal action case will be aborted, funds will be returned to members within 14 days and that will be the end of the line for this campaign for myself and Property118 – at least for 12 months or more anyway. If necessary we will then take another look at Plan B.

UPDATE – 31st March 2014

Since publishing this article our campaign has raised over £450,000 and legal action has now commenced. The official closing date for borrowers to be represented in this action was 28th March 2014. However, it may still be possible to be included in the representative action by paying additional fees to cover administration and Court fees to be added to the list of represented claimants. For further details please Contact Carla Morris-Papps at Cotswold Barristers – telephone 01242 639 454 or email carla@cotswoldbarristers.co.uk

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