A group of landlords taking Bank of Ireland to court over their tracker rate being raised has been forced to change tactics.
They have dropped their legal case against Bank of Ireland because of the expected costs of the case and will instead pursue the solicitors who advised them on the mortgages.
Mark Alexander, founder of Property118, said: “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 increase in the base rate.
The case is similar to the West Bromwich Building Society one, where a judge ruled it was wrong to vary mortgage interest rates in the absence of a change in the Bank of England base rate.
The decision meant West Brom had to reimburse those landlords affected, which could cost £27.5m.
A spokeswoman for Bank of Ireland 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.”