A legal battle over West Bromwich Building Society’s increase in its tracker mortgage rate will go to the Court of Appeal in April.
Landlords have been taking legal action against the building society over a 2 per cent hike in their tracker rates.
The case stems from September 2013, when 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 increased from 1.49 per cent to 3.49 per cent from 1 December.
In 2015, the High Court backed West Brom, saying the building society was within its rights to hike rates by 2 per cent as a result of “changing market conditions”.
Now the landlords are hoping that the Court of Appeal will find in their favour at a hearing to be heard on 27 or 28 April in the Royal Courts of Justice.
Mark Smith, the barrister leading the case, said: “The issue is whether the contract was correctly interpreted by the judge in the High Court.
“The judge said the clause allowing the variation of the rate was paramount, but we say that is wrong, and the clause setting the interest rate at 1.99 per cent above the Bank of England base rate for the life of the mortgage was paramount.
“I would say we are optimistic. Some of the people involved in this case have had their mortgage payments more than double each month, and it means they are in the red when they should be in the black.”
There are around 230 landlords taking part in the action. A Court of Appeal decision would affect 6,700 mortgages.
West Brom has confirmed that it will apply the result of the case to all affected mortgages rather than just those taking part in the legal action.
According to its most recent financial statement, the rate uplift contributed £21m from the application of the rate change in December 2013 to 30 September 2015.
A spokesman from West Brom said: “We have always maintained that we have acted entirely appropriately and in the best interests of our membership. This position is supported by the decision of the courts last year.”
Adviser view
Ray Boulger, senior technical manager at John Charcol, said: “If the lender has to rely on the small print then they are on the back foot.
“It is well known that people don’t read the small print, so it is incumbent on the business writing the document that anything material is explained in the large print.”
