Landlords lose High Court battle over mortgage rate hike

Landlords have lost a High Court legal battle challenging their lender over a 2 per cent increase in their mortgage rate.

In September 2013, West Bromwich Building Society told 6,700 of its buy-to-let customers their rates would increase by 2 per cent on 1 December that year.

The landlords were on tracker rates, which are designed to move in line with the Bank of England base rate.

But despite base rate remaining at 0.5 per cent since March 2009, the lender decided to hike its rate anyway, and said it was allowed to do this thanks to the way its contracts were worded.

Over 400 landlords who own multiple properties joined a legal fight by action group Property118.com to fight the decision.

The case was heard at the Royal Courts of Justice in London last month.

In a judgment published last week, Mr Justice Teare ruled that West Bromwich Building Society was within its rights to increase its tracker rates.

The judge said although the lender’s terms and conditions suggested the tracker rate would follow the base rate, another clause said West Bromwich was allowed to change the rate for a number of reasons, including “to make sure our business is carried out prudently, efficiently and competitively”.

The judge added that taken together, the contract meant West Bromwich was able to increase its mortgage rates.

Since the tracker rate hike was announced, the increase has fallen from 2 per cent to 1.5 per cent.

The landlords involved plan to appeal.

Natalie Holt