Furious landlords have banded together to take on West Bromwich building society after it announced its increase on tracker rates on buy-to-let mortgages. They are currently planning a class action against the lender.  

Following the Bank of Ireland’s decision made four months ago to increase their buy-to-let rates, the building society announced their increase last month and there are nearly 6,700 landlords who will have to suffer a two percentage point rise that will take effect from December 1st. The Bank of Ireland hit 13,500 landlords and they consequently faced a legal battle.

West Bromwich’s actions to up their buy-to-let rates could inflict a 100% increase for some of their borrowers. They are defending their decision by using a contract clause that states to “reflect market conditions” and to be prudent, competitive and effective. This is despite the fact that the Bank of England has not changed its base rate.

Mark Alexander of a leading landlord’s forum, is co-ordinating a legal campaign against the West Brom rate increase.
He said: “Whether you are a client of West Brom, Bank of Ireland (which has also done the same) or indeed you have a tracker mortgage elsewhere you need to help fight this case. Your tracker mortgages may not be with West Brom or Bank of Ireland, however that does not mean that you are safe. You may be OK today but what about next week, next month or next year?”

The forum has so far attracted up to 700 landlords and is raising funds to take a class action lawsuit to court.

Solicitor Justin Selig of The Law Department said: “I have had a look at the paperwork and there doesn’t seem to be any reference to the ability to increase the margin, so I don’t know how they think they can get away with it. This is definitely worth fighting.”

The FCA, Financial Conduct Authority has now entered the fray and is carrying out checks to see if the building society is in violation of mortgage rules.

Linda Woodall, FCA director of mortgages and consumer lending said that although West Bromwich’s change in rate is in the BTL marketplace and is not under regulation by the FCA, they may still look at such actions on a case by case basis.