(Part 1 of a short series on how Landlords are acting for themselves. See part 2 and part 3).
Landlords, in particular, small landlords, are feeling under threat:
- The Government are clearly hostile and are trying to tax them out of existence
- Agents are using landlords’ funds as their own loose change and ‘getting away with it’, and
- Banks and building societies think that they can change mortgage terms and conditions with impunity.
Well, landlords are getting fed up with it and are banding together to fight back.
This is the first in a short series looking at what they are doing about it. Starting with the last item on my list.
The West Bromwich Building Society Action
In 2013 the West Bromwich Mortgage Company wrote to over 6,000 of its buy to let mortgage customers telling them that they were going to be charging them a premium and also indicating that they reserved the right to call in mortgages if they thought they were an ‘unprofitable business’ – presumably even if they were paying their mortgage payments!
Well, landlord, investor, and Property 118 founder Mark Alexander was not going to put up with that – and unlike the majority of landlords, he had the wherewithal and the contacts to do something about it.
He got together with around 300 landlords in a similar position, raised some finance and challenged the West Brom in the courts.
The other day they won their case in the Court of Appeal. Which I think is a very significant victory.
So what?
If you are not a landlord you may think ‘so what, why should I be bothered if a bunch of landlords have to pay a bit more to a bank?”.
The answer to that is that it ought to bother everyone.
Banks are big wealthy institutions. They have teams of lawyers looking out for their interests. If they decide to do something illegal, there is often little that their customers can do about it.
However if you sign a mortgage agreement under certain terms and conditions, those should be the terms and conditions that govern that mortgage until it is paid off. The mortgage company should not be able to come along and say ‘I think I am going to change those terms and charge you more money – and by the way, if we don’t like you, we are going to call the loan in”.
That’s outrageous. But that’s more or less what they were doing.
If the banks are allowed to get away with that sort of thing, who knows where it will end? You may not like landlords, but set a precedent like that and you may find it happening to you. Whoever you are.
So I say “well done Mark Alexnder and his team”. Justice has prevailed. Judges CAN be trusted (mostly) to come to the right answer. In the end.
But it takes a lot of money to get there.