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West Brom tracker hike ruling ‘leaves a sour taste’

Brokers say they are “disappointed” by a High Court ruling which upheld the West Bromwich Building Society’s decision to hike a tracker rate by 2 per cent.

Last week, a group of landlords lost their legal battle with the building society after arguing the decision breached their contractual rights.

In September 2013, West Brom told 6,700 of its buy-to-let tracker customers their rates would increase by 2 per cent on 1 December.

The borrowers all have mortgages with West Bromwich Mortgage Company, its now closed specialist lending arm, and own multiple properties.

A class action attracted more than 400 individuals who each paid £1,144, raising more than £500,000 to fund the challenge.

The landlords plan to appeal the decision. 

Coreco director Andrew Montlake says: “While I understand there is small print in contracts, if a deal is advertised as a tracker rate then it should abide by the rules of tracker rates.

“This decision is disappointing and could allow other lenders to hike rates in future. The terms of rates need to be absolutely clear to customers.”

Specialist buy-to-let mortgage broker TBMC chief executive Andy Young says: “Legally it was within the West Brom’s powers to increase the rate, but it still very disappointing that despite treating customers fairly rules they should invoke a clause hidden in the terms and conditions. Morally, this leaves a very sour taste.”

Young adds the decision will encourage landlords to be more “savvy” when checking lenders’ terms and conditions. owner Mark Alexander, who lead the action, says: “We will be seeking leave to appeal and have 21 days to do so. The judge failed to consider established case law and we will be basing the appeal on that.

“We are feeling very positive and have enough funds for the appeal. This decision is of interest to thousands of people as other lenders could try to use this case to do something similar to boost their profits.”

A West Brom spokesman says: “We have always maintained that we acted entirely within the terms and conditions of these buy-to-let mortgages and the court’s ruling wholly justifies our position. The increase was made to reflect changing market conditions and the need for us to carry out our business prudently, efficiently and competitively and in the best interests of our members.

“We have approached this in a fair manner, passing on any improvements in market conditions by reducing the additional percentage borrowers have to pay.”

The spokesman says since the rate hike was announced, it has reduced from 2 per cent to 1.5 per cent.

A group of Bank of Ireland borrowers had launched a similar legal action against the lender after it hiked its rates, which has since been dropped.

In February 2013, Bank of Ireland wrote to 13,500 buy-to-let and residential customers on tracker mortgages to say their interest rate would more than double.

However, in late May Bank of Ireland reversed its hike for 1,000 flexible accounts customers and 200 more who had switched to a tracker mortgage.

A group of over 300 customers joined a class action against the move, which has since been shelved due to a lack of funding.

Alexander says: “We are hoping that if we win our appeal against West Brom we could revive the action against the Bank of Ireland.”


September 2013: West Brom tells 6,700 of its buy-to-let tracker customers their rates will increase by 2 per cent on 1 December

November 2013: 150 borrowers launch a legal challenge against the move

January 2014: Number of claimants reaches 400 as the case is pushed to court

January 2015: High Court rules in favour of West Brom



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Bank of Ireland sucks.

  2. Absolutely to the contrary. They are to be praised and congratulated. Has anyone bothered to look at the interest rate they pay savers. It is really rather good.

    They are doing exactly the right ting rewarding the prudent at the expense of the feckless. Would that more would do the same thing – and our Government also!

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