Landlords taking legal action against West Bromwich Building Society over a 2 per cent hike in their tracker rates have been told they will get their day in court after mid-November.
A case management hearing was scheduled for Friday 17 October, but was ‘vacated’ after both parties consented to orders that would have been made*.
According to Mark Alexander, who runs the campaign group Property 118 and is leading the case, a court date can now be applied for after 17 November.
Last September the lender told those with multiple property portfolios that their buy-to-let rates with the now closed specialist lending arm West Bromwich Mortgage Company would be hiked by 2 per cent, from 1.49 per cent to 3.49 per cent from 1 December.
The subsequent action attracted more than 400 individuals that believe the decision breached their contractual rights. Over £500,000 has been raised to cover legal costs, with each claimant paying £1,144 to back the case.
Mr Alexander told FTAdviser that West Brom had “called their bluff” and the borrowers paid up, adding that they have “a very strong case”.
At the time of the rate rise West Brom stated that the changes were permitted under the terms and conditions of the accounts and were “a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively”.
Ray Boulger, senior technical manager for John Charcol, previously told FTAdviser: “Buy-to-let is not regulated by the FCA although they clearly regulate West Brom, so the mere fact that buy-to-let is not regulated is not going to give them a ‘get out of jail free’ card but [does] make it more difficult for the borrower.
“One could argue this contravenes the regulator’s TCF requirement if West Brom relied on a clause buried in its contract. Borrowers would be surprised of this rise and take the view this is not something West Brom can do. Clearly those involved could launch a class action.”
A spokesman for West Brom told FTAdviser that the lender is standing by its decision and preparing itself for the court date.
A homeowner with a West Brom lifetime tracker said she was left with “sleepless nights” over her future pension income after the unexpected rate rise.
peter.walker@ft.com
*Update 24 October
The article was updated on the above date to correct the reference to the scheduled case management hearing and remove comments attributed to the judge. Clarifications have since been provided which confirm the hearing did not take place on the 17 October and that the parties agreed the orders in correspondence.
