Landlords to start legal action against BoI and Skipton

A group of disgruntled customers are expected to start legal action against Skipton Building Society and Bank of Ireland next month as the fallout continues from a landmark court case on tracker rates.

It is now almost three years since Property 118 questioned a West Brom – 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 last month 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, BoI and Manchester Building Society 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. The group hit its initial £60,000 target last week and has set a second target of £100,000.

But while Property 118 has suspended its plans to pursue Manchester BS due to insufficient data and complaints, the group’s founder, Mark Alexander, has confirmed plans to start legal action against Skipton and the BoI next month, in terms of issuing pre-action protocol letters.

Skipton increased its standard variable rate on residential mortgages from 3.5% to 4.95% in 2010 and BoI raised rates for its base rate tracker mortgage customers in February 2013.

But the case against Skipton and BoI will not be an easy one to win as they both reject the claim that the outcome of the West Brom case is applicable to them.

A Skipton spokesman said: “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.

“The recent decision of the Court of Appeal in the Alexander v West Bromwich Mortgage Company Ltd 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.”

A BoI spokeswoman added: “The West Bromwich case is not com­parable to Bank of Ireland UK.

“BoI’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.”

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