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10:59 AM, 29th January 2015, About 9 years ago 390
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Today was Judgement Day in the case of Mark Robert Alexander (me) vs the West Bromwich Mortgage Company. I was representing a group of 360 affected borrowers, who between them contributed nearly £500,000 to fund the legal action. I am extremely disappointed to report that we didn’t get the News we were so desperately hoping to receive.
#WestBromTracker – please re-Tweet if you think we should appeal – http://t.co/UgNLSXvurt
— Mark Alexander (@iAmALandlord) January 30, 2015
Could this be the end of tracker mortgages as we know them for up to 1 million people in the UK?
The Judge, Mr Justice Teare ruled that the mortgage company were within their rights to increase the premium (margin) on the rate they charge above the Bank of England base rate. He also ruled that West Bromwich Mortgage Company had the right to call in mortgages with 30 days notice. Clearly we are shocked at his decision and we anticipate outrage from the general public too.
The special conditions in my OFFER OF LOAN state (I’ve added bold capitalisation for emphasis) ….
“After 30th June 2010 your loan reverts to a variable rate which is the same as the Bank of England Base Rate with a premium of 1.99% UNTIL THE TERM END.”
NOTE the words “until the term end”, which I have always understood to mean that the premium of 1.99% over the Bank of England Base Rate would apply to the remainder of my 25 year mortgage after the initial 4 year fixed rate period was completed. The Bank of England Base rate today is 0.5% so you would be forgiven for thinking that I should be paying a rate of 2.49%. However, the West Bromwich Mortgage Company have added another 1.5%, meaning that I’m now paying them 3.99%. When they first increased the rate, the margin they added on was 1.99%. Should I be thankful they reduced it? What’s to stop them putting it up to 10% tomorrow? Well according to the Judge, Mr Justice Teare, apparently very little!
The Special Conditions, which the mortgage company are relying upon to vary the premium (margin), are generic to all of their mortgage products and come in the form of a booklet. It is very obvious that the Special Conditions booklet is generic to their entire mortgage range because in one section it says the property cannot be let, which is clearly inconsistent with a Buy To Let Mortgage.
To deal with issues of inconsistency between the OFFER OF LOAN and the Special Conditions booklet the mortgage company also has the following condition in the very same Standard Conditions booklet it has been allowed to justify the increase in the premium charged ….
“These Mortgage Conditions incorporate any terms contained in the OFFER OF LOAN. If there are any INCONSISTENCIES between the terms in the Mortgage Conditions and those contained in the OFFER OF LOAN then THE TERMS CONTAINED IN THE OFFER OF LOAN WILL PREVAIL.”
I accept that the mortgage company needs the contractual ability to vary their Standard Variable Mortgage rates in their generic Special Conditions booklet and I had every reason to believe that the clause they are now relying upon to increase my interest rate only exists because Standard Variable Rate mortgages are not pegged to another rate in the same way as a tracker. I had no reason to assume that the clause allowing them to make variations to interest rates would affect me, after all I had a Tracker Rate Mortgage with a premium over the Bank of England base rate UNTIL THE TERM END, which in my case is in the year 2031.
Would you have come to the same conclusions I did?
The reason I took the lead and encouraged other affected borrowers to fund this expensive legal battle was that the industry regulators have a proven track record of allowing banks and building societies to get away with this particular form of “daylight robbery”. In 2013 the Bank of Ireland hiked its rates for over 14,000 customers with Tracker Mortgages, many of them were home-owners, NOT Landlords. The regulators proved ineffective for affected complainants. Prior to that, in 2009, the Skipton Building Society CEO publicly confirmed that their Standard Variable Rate mortgages were capped at 3% over the Bank of England base rate and that pledge would be honoured despite market conditions. A year later that promise was broken and the regulators did nothing about that either!
The problem that all borrowers have faced when complaining to regulators has been that all mortgage lenders who have been a party to these rate hikes to date have very sneakily targeted borrowers who ‘fall between the cracks’ in terms of consumer protection regulation. WBMC targeted borrowers who own three or more properties whereas the Bank of Ireland relied on a date when mortgage selling regulations changed. The the Bank of Ireland case this provided them with an opportunity to mercilessly target homeowner mortgages too. Anybody who took out a Tracker Mortgage before the MCOB (Mortgage Conduct of Business) rules were introduced on 31st October 2004, AND anybody who owns three or more properties has good cause to be VERY worried following the judgement passed today.
There are an estimated 1 million Tracker Rate mortgages in the UK, they were very popular in the decade prior to the Credit Crunch. I have other tracker mortgages with other Buy to Let lenders and I am fearful that if they follow suit all my hard work to generate money to invest for my retirement will be undone. Many homeowners with tracker rate mortgages could also lose their homes.
I simply couldn’t allow this to continue unchallenged. Somebody had to stand up to the financial bullies and I am proud to have been one of them, despite this awful news.
The question now is; “Should we appeal?”
We already have £68,912.39 lodged with Barco (The Bar Council Escrow Account Service) and we have paid £350,000 into the Court on account of the other sides claimed legal expenses. The Judge is yet to rule on costs to date so we may get some of the money paid into Court back too. We don’t yet know how much an appeal will cost in terms of paying the others sides legal fees if we lose, however, our barrister is so dissapointed by the verdict that he has already offered to represent us in the Court of Appeal on a no-win-no-fee basis, despite this not being covered in his original terms of engagement.
I also worry about the potential impact on tenants. The ramifications of lenders being able to hike up Tracker Mortgage interest rates or call in unprofitable loans on a whim (even if they are not in default) could no doubt result in mass defaults of repayments and inevitable repossessions of the quality rental property which has been funded by Buy To Let mortgage lenders. The knock on effects to tenants in terms of security of tenure and the availability of quality accommodation, afforded by the very existence of Tracker Rate buy to let mortgages, could be devastating!
Please share your thoughts in the comments section towards the bottom of this page.
Mr Justice Teare’s 20 page reasoning for his ruling is available free of charge via the Courts. However, I am asking everybody reading this article to donate £50 by completing the form below and in return we will immediately redirect you to a full copy of the Judges ruling. All money received will be used in a marketing campaign to raise awareness of the potential consequences of this dreadful decision. If you want to donate more than £50, simply order two copies for £100 or three for £150 etc. We believe we have already raised enough money to fight an appeal. However, we must not dip into these funds to promote the importance of the case, hence the need for an additional fundraising campaign.
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Richard Mann
22:39 PM, 30th January 2015, About 9 years ago
Why have the NLA adopted this attitude !
No landlords no business right?
It's in their own interest to be vocal supportive and jolly well proactive
What is the point in having a representative group of MUTED individuals
Do they not realise how serious this is.
Do they have lobbyists or political acumen
This issue has huge repercussions or would they prefer to bury their heads deep in the ground and hope it all goes away.
Where is NLA REPRESENTATIVE stand up and show yourself
Sian Hemming-Metcalfe, MARLA (INV)
8:39 AM, 31st January 2015, About 9 years ago
I am hugely disappointed for you as I cannot fathom why something so obviously wrong has been allowed to stand! I've shared the article on all social media accounts and with everyone I can think of including a few journalists I know.....
Steve Masters
9:53 AM, 31st January 2015, About 9 years ago
What we bought was a donkey with stripes painted on made up to look like a zebra.
When the stripe came of we asked the seller to replace the donkey with a real zebra.
The judge has said that we bought a donkey with painted stripes which only looks like a zebra so we can't have a real zebra.
We need to publicize the donkey sellers for what they are, con artists.
We should go to trading standards to complain that donkey sellers have been mis-selling painted animals as well as stand in front of the market stall and shout "Donkey Seller" at the top of our voices.
Steve Masters
10:17 AM, 31st January 2015, About 9 years ago
In it's defense the donkey seller produced a sale contract that referred to "stripped animal" and that is what the judge based his ruling on even though the animal was advertised with a sign round it's neck saying "Zebra".
Steve Masters
10:27 AM, 31st January 2015, About 9 years ago
That clause read: "in certain market conditions the seller reserves the right to replace the advertised animal with any stripped animal as it sees fit".
All BankersAreBarstewards Smith
12:08 PM, 31st January 2015, About 9 years ago
I also have written to Mark Carney.
NLA is a patriarchal, Victorian, outmoded organisation. I worked with it, and used it as a member for years, and I left 3 years ago - I don't miss it.
There is more better quality advice on here than any NLA "help line" staff ever gave me.
NLAs sole concern now is selling stuff to their members - shame on them
David Lawrenson
13:10 PM, 31st January 2015, About 9 years ago
NLA's legal advice was that we would not win.
And that is fair enough, however, one thinks they could have done more to nevertheless highlight the injustice of what West Bromwich were trying to do. NLA has been too silent on this - and they are aware of my opinion on this.
I find the judge's decision bizarre.
On the press forums many of the landlord-haters are saying, "Well, you greedy landlords, you deserve it." (As if contracts mattered for nothing).
Little do they realise their own trackers could now very well be next - and with this crazy judgement, the chances have just increased substantially.
I hope we all do our best to make the point that now all borrowers trackers - not just landlords' ones - are now very much in the frame for hikes and also that the increasing costs will be passed on to tenants in the way of increased rents.
Maybe then more of the press will pick up on the utter injustice of this.
On a lighter note, the judge should go back to chairing Dibley Parish Council and keeping Geraldine Grainger in check (a lookalike if ever there was one)
David Lawrenson LettingFocus.com
Dean
14:12 PM, 31st January 2015, About 9 years ago
Did we ever get anyone with a copy of an agreement with west brom on a SVR mortgage ?
If their offer of loan refered to clause 5 wouldn't that indicate they is what Clause 5 was for.
If we don't have one how about offering someone £1000 reward for providing us with a genuine one ?
Appalled Landlord
14:31 PM, 31st January 2015, About 9 years ago
Hi Richard
Have you asked your solicitor how, at the time you took it out, he regarded clause 5 as regards applying to your tracker mortgage?
My solicitor was not involved. I used Enact instead, the firm paid by WB as part of the promotion to get my business.
All BankersAreBarstewards Smith
14:35 PM, 31st January 2015, About 9 years ago
I am not one of the litigants, but although I have a btl with W.B. I have not had my interest rates increased. Having just gone through all my documents to see if I could help, I now realise what an incompetent set of idiots WB are... the number of different "product names" they have used for my loan over the years beggars belief.... they do not seem to have any kind of efficient operation at all. My loan was originally with a different company and then sold on to them.. so the handover of information may not have been as good as it might have been.