Tracker mortgage legal victory for buy-to-let landlords

Row of properties

A group of buy-to-let landlords has successfully challenged an increase to the rates of their tracker mortgages, which was imposed despite no change to the Bank of England base rate.

The group, led by property investor Mark Alexander, lost in the High Court last year, but now three Court of Appeal judges have unanimously found in its favour.

Mortgage lender West Bromwich Building Society (West Brom) increased the rates of its buy-to-let tracker mortgages by nearly two percentage points in September 2013, causing the group of around 350 affected landlords to launch legal action.

Tracker mortgages are supposed to ‘track’, that is, follow, the Bank of England base rate, but West Brom included a clause in the terms and conditions of the mortgage that allowed it to change the rate even when the Bank of England base rate had not moved.

Mr Alexander claimed that, without the judgment in the landlords’ favour, as many as 1 million tracker mortgages could have been affected. He said: “This ruling sends a clear message to other lenders who have acted in a similar manner, and to those who might have considered following suit.”

This ruling paves the way for landlords to challenge other lenders who have acted in this way. West Brom said it would now contact all affected borrowers and promptly process any reimbursements due. The cost to the lender is expected to be £27.5 million.

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