It is nearly a year since the Summer budget when Osborne announced the first raft of punishing tax changes for the UK’s 1.7 million landlords, only to be compounded by yet more in the Autumn statement. After much gloom had descended on the landlord community and many resolve to sell up, it was with so fantastic last week to hear the news that the Court of Appeal ruled that West Bromwich building society was not entitled to arbitrarily hike mortgage interest rates for landlords. The result of this court action has surprised many and put a spring in the step of property118 campaigners looking to get a judicial review of forthcoming tax changes.
400 landlords backed the case against West Bromwich Building Society. 6,415 borrowers had buy to let mortgages which either reverted to base rate plus a margin or were lifetime trackers. In September 2013 the lender wrote to borrowers telling them that they were increasing interest rates by just under 2%, citing a clause in the small print that allowed them to vary rates to reflect market conditions. This in spite of the fact that their own marketing literature described a tracker mortgage as a product that “gives you the certainty of knowing that the rate you pay will move in line with Bank base rates.” The lender also threatened to call in mortgages with 30 days notice if they deemed them to be “unprofitable business,” regardless of whether customers were in arrears or had defaulted. The lender now faces a bill of £27.5million and will have to repay customers for overcharging them.
The West Bromwich case raises some critical issues for the landlord community. It shows that policy makers think landlords are fair game. They think they can ride the crest of public disapproval and treat us unfairly without suffering any reputational damage. They fail to see landlords as the legitimate business people we are, providing a crucial 19% of housing stock and homes for 9 million UK citizens. The dominant discourse in British culture that profiting from property is vulgar creates a climate where seemingly landlords can be bullied without remorse. The outcome of this case is reminiscent of the Judicial Review that quashed borough wide selective licensing in Enfield, where a local authority sought to fund its private sector housing department by licensing all rented properties in the borough, supported by spurious claims of anti social behaviour. Against the odds, the judicial review exposed the consultation as a sham and has made local authorities more cautious about introducing their own schemes. What both cases have in common is the tenacity of the landlords involved and crowdfunding.
The NLA provided advice and support for both of these cases, but stopped short at offering funding. This in the belief that these cases had limited chances of success. In a break with this policy, Chief Executive Officer, Richard Lambert has pledged £10,000 towards the Section 24 campaign. But have the odds on success improved? The campaign still awaits a decision from a judge whether the Judicial Review can proceed and the case hangs on EU and Humans Rights legislation including the assertion that tax changes affect individuals and not companies and that this constitutes illegal state aid for businesses. Some argue that the West Bromwich case was a simpler matter as it concerned contract law, whilst this latest judicial review campaign is attempting to reshape a budget – the highest profile of primary legislation. A senior TV producer this week asked me if I was expecting him to be able to get a TV audience to care for a wealthy person who owns a considerable number of properties. Implicit is that if you’ve worked hard to build a business and create your own financial security you are undeserving of anybody’s sympathy. Let’s hope the judicial system has a less jaundiced view of fairness.