Much to landlords’ dismay, the judge presiding over their case against West Brom’s tracker rate increase has dismissed it. He ruled that the building society was within its rights to increase the rates, despite the Bank of England’s base rate having not increased and it seems that this is irrelevant.

As reported in a previous news story, the landlord group was headed by Mark Alexander and he has blogged:

“I am extremely disappointed to report that we didn’t get the news we were so desperately hoping to receive.

“The Judge, Mr Justice Teare, ruled that the mortgage company were within their rights to increase the premium (margin) on the rate they charge above the Bank of England base rate. He also ruled that West Bromwich Mortgage Company had the right to call in mortgages with 30 days’ notice. Clearly we are shocked at his decision and we anticipate outrage from the general public too.”

In December 2013, the Building Society informed more than 6,500 of their borrowers that had buy-to-let tracker mortgages, it intended to increase the interest rate on their loans, despite the fact that the Bank of England’s base rate had not risen for six years.

Alexander along with other landlords was led to believe that when his initial fixed period finished, then his rate would be kept at 1.99% until the mortgage had been paid in the agreed timescale.West Brom wrote to him saying that the margin would be 3.99%; they have since reduced the interest rate to 3.49%.

The Building Society’s “get out/special conditions” clause included in its mortgage contract was used to increase the interest rate, even though the Bank of England’s lowest ever rate of 0.5%, had not been increased since March 2009.

Mark Alexander is deciding whether to launch an appeal.

Richard Merrick of PIMS said: “The judge’s decision is extremely worrying for all landlords, as other lenders will jump on the bandwagon using similar clauses in their terms.

“Landlords are not offered the same protection as consumers and are an easy target. That isn’t to say that lenders will force up interest rates for people living in their own homes.”