A group of landlords has suspended its plans to take the Bank of Ireland to court over their tracker rate being raised due to the high costs involved in the case and will now launch action not against the against the Bank, but the law firms involved in advising upon and completing the mortgages.
Mark Alexander, founder of Property118, told the press: “The cost of taking the Bank of Ireland to court to challenge their understanding of law would be around £1m because we would have to make provisions for paying their legal fees if we were to fail.
“We don’t think we would fail but we don’t think we can expose people to that risk.
“The plan is to take action against the solicitors who advised them.
“If there are a significant number of claims against the solicitors it will be their PI insurers to pay out and it may well be more economical for the insurers to pay for the legal action against Bank of Ireland.”
In February 2013, Bank of Ireland increased rates on 13,500 base rate tracker mortgages despite the fact there had been no rise in the base rate. The case is similar to the West Bromwich Building Society one
It has now been three years since Property 118 questioned West Brom’s - the now obsolete specialist lending arm - decision in September 2013 to raise its tracker rate for around 6,700 landlords without a base rate rise from 1.49% to 3.49%.
Despite legal action launched by Property 118, a court sided with West Brom in January 2015, saying the lender was allowed to increase its rates to handle changing market conditions. But that decision was overturned by the Appeal Court in June 2016 after it found that West Brom had been wrong to raise rates in the way it had.
West Brom eventually repaid £27.5m of overpaid interest to its customers and this led Property 118 to question the way other lenders were treating tracker rates, identifying Skipton, Manchester Building Society, and the Bank of Ireland as dealing with their customers in a similarly unfair way.
The Property 118 Action Group has been using a crowdfunder website to build up funds to sue lenders that acted in a similar way to West Brom.
However, the case against the Bank of Ireland will not be an easy one to win as it rejects the claim that the outcome of the West Brom case is applicable to them.
A Bank of Ireland spokesperson said: “Bank of Ireland’s offer document and the mortgage terms and conditions expressly stipulated that the tracking margin or differential could be varied.
“Bank of Ireland UK’s Offer and Mortgage Conditions documents were therefore consistent allowing for the differential to be changed.
“As well as the Mortgage Conditions, the relevant clauses were also clearly referenced in the pre-sale offer document provided prior to completion.”
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