Hundreds of Gloucestershire landlords have appointed a Cheltenham barrister to represent them in court against the West Bromwich Building. Acting on their behalf, he has accused the Building Society of illegally increasing their interest rates.

Mark Smith, the barrister, is looking after the interests of 350 thoroughly disgusted landlords, mostly based in Gloucestershire, in Court over the punitive increase in their buy-to-let mortgage rates.

Overall it is forecasted that as many as 6,200 West Bromwich Building Society's clients are more than likely to have been affected by its 2% increase, without any prior warning.

The landlords all have tracker mortgages and accordingly the rates are supposed to “mirror” the Bank of England’s base rate. Somebody within the company may have forgotten to tell West Bromwich that the rate has remained at 0.5% for the last six years.

‘Market conditions’ was the reason/excuse given for the increase in the rate and that the building society was after all only making its business to run, ‘prudently efficiently and competitively’.

Legal proceedings followed after numbers of complaints flooded the Financial Ombudsman.

Mark Smith had informed Mr Justice Teare that the building society’s actions were unreasonable and unfair and that the small print clauses in the mortgage contracts, that previewed their right to increase rates, were ‘inconsistent’.

Smith also accused the building society of ‘grafting’ on of the personal term offers onto the apparent standard terms, that the building society is reliant upon in their defence and should not hold legisitive weight.

On the steps outside the court Smith warned: “They are saying they can just move the rate to make themselves solvent, and  residential mortgages will be next.”

The building society denies that this will ever happen to consumers and that the increase of tracker rates was only for those landlords with three plus mortgages.

Raymond Cox QC, for the building society, said the building society potential of increasing rates ‘was repeatedly made clear’ and that the Financial Ombudsman had reviewed the agreements and had agreed. 

The court heard that the interest rate hike has now been reduced from 2 per cent to 1.5 per cent.....1% to go then.

A judgement should be concluded shortly.