Building Society faces £27.5 million bill after landlords win legal battle
08 June 2016 by Sell and Save
The society more than doubled the tracker mortgage interest rate it was charging 6,700 landlords back in 2013, but the Court of Appeal ruled it was wrong to do so.
Handing down the judgment, Lord Justice Hamblin ruled that interest rates on tracker mortgages should only rise with Bank of England base rates.
The decision overturns a High Court ruling in January last year. The West Brom said it was ‘disappointed’ at the Appeal Court’s decision.
The case was sparked by the West Brom’s decision to raise interest rates from 1.49 per cent to 3.49 per cent on mortgage tracker borrowers who had loans with West Bromwich Mortgage Company, its now defunct specialist lending arm.
Landlord group Property 118, headed by Norfolk property investor Mark Alexander, raised around £500,000 from 400 landlords and instructed Cotswold Barristers to take on the West Brom.
Writing on the Property 118 website, Mr Alexander said: “This ruling sends a clear message to other lenders who have acted in a similar manner, and to those who might have been considering following suit. There are thought to be in the region of one million tracker buy-to-let mortgages which could have been affected in this case had gone the wrong way.
“I am extremely grateful to all of the Property118 Action Group members who didn’t lose faith in our quest for justice. My win will now be automatically applied to them due to the fact they were represented by my case.”