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Skipton Building Society Pulls a Fast One on Mortgages. Will Other Lenders Follow Suit asks LettingFocus.com

I’m interested in the recent decision by Skipton BS to unilaterally change the way the Standard Variable rate (SVR) is applied on their variable rate mortgages.
It could set a precedent to other mortgage companies.
In their mortgage agreements it was apparently stated that the SVR would be at a set amount above Bank of England base rates but it seems there was also a clause which in the event of “exceptional circumstances” allowed them to alter this.
So they have now invoked this clause and bumped up their rates.
Nice!
I guess they have checked that the mortgage agreements with their customers really allowed them to pull this trick but I wonder if this was made crystal clear within the main part of the original mortgage agreements when their customer signed.
If not, then how legal is this move?
Indeed I wonder if there is a case of an Unfair Contract term here.

PARALLEL IN THE FOXTONS CASE?
In the Skipton case, I’m wondering if there is a parallel with the recent case of the Foxtons letting agency renewal fees.
Here, Foxtons got into trouble with a judge because the renewal fee (or repeat fee) it charged landlords when a landlord extended their tenancy was hidden away and not made clear to the landlords when they signed up with the letting agent.
The judge ruled that in cases where the possibility of repeat renewal fees on lettings was not made clear by Foxtons (and indeed any other letting agent) it acted as a kind of “trap” for consumers.
Indeed, the judge actually used the word “trap.”
The Foxtons ruling has opened the way for landlords to claim back years of overpaid renewal fees with letting agents. (We have commented extensively about the Foxtons case in other posts – click on the Categories at the bottom of this post for more on this.)
So far, I see no one in the main stream press has really bothered to question the action of Skipton Building Society in invoking an odd clause to up their SVR rate.
Perhaps they should.

MORTGAGE CUSTOMERS OF OTHER BANKS SHOULD BE WORRIED TOO
I have to declare a particular interest here.
One of my buy to let mortgages is on a lifetime tracker of 0.69% above base for life; another is on 0.89% above base - also for life. Others mortgages have neatly defaulted to 1.5% above base for the rest of time.
I do hope the lender who issued those - in both cases for a one off mortgage fee of much less than £1,000 (ah the good old pre credit crunch days!) - will not be able to wriggle out of what is a great deal for me! And a duff one for the banks!
Many other people with mortgages which were taken out in the good times will be in the same boat as me and will be wondering if they could also get shafted by their lenders in the same way as Skipton has hit its borrowers.
Someone needs to look into this before the rest of the banks and building societies follow Skipton’s lead.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.
I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – which has been the UK’s top selling commercially published property and buy to let book for the last 3 years.
At a corporate level, I provide consultancy for banks, local authorities and social housing providers – helping them with their landlord facing or buy to let product strategies.
I also write for property websites and am regularly quoted by the media.
I have written articles for numerous publications including The Independent, The Telegraph and quality landlord websites.

We still do a bit of work for private landlords too.
We help landlords and property investors make money in property by coaching them in ways that really work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one to one mentoring / coaching basis or through our occasional group seminars.
Unfortunately, in the UK today, property advice in the UK is still largely unregulated and what counts as “good advice” is too often more about making the promoter money than giving useful information to the investor.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show investors how to manage tenants properly and fairly.

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