A group of buy-to-let landlords have won a significant legal battle against the West Bromwich Building Society, which is now faced with a £27.5 million compensation bill as a result.
The case against West Bromwich was brought on the basis of claims that the building society wrongfully increased interest rates relating to some of its buy-to-let mortgages.
That claim has now effectively been supported by court of appeal judges, who have left West Bromwich with a very sizable bill to pay.
However, statements given on behalf of the building society have insisted that the pay-out will not put the financial stability of the organisation in any danger.
“Our financial position remains very strong,” a spokesperson for the society said after the recent ruling was handed down.
The ruling related to mortgages provided by West Bromwich to more than 6,000 buy-to-let landlords around the UK on the understanding that the associated interest rates would increase in response to any rises in the Bank of England’s base rate of interest.
However, in 2013, the building society decided to increase the monthly costs of its mortgages despite there having been no corresponding rise in the Bank of England’s base rate at any point since 2009.
It was this decision which court of appeal judges have now decided West Bromwich was not within its rights to take. The case was initially heard but rejected by the high court.
A group of borrowers affected by the issues collectively raised thousands of pounds to legal costs and fought the case as the Property118 Action Group.
As many as 6,415 borrowers who were affected by West Bromwich’s actions are now set to be contacted and refunded any amounts of money they were wrongly charged by the building society.
“Naturally we are disappointed by today’s decision from the court of appeal,” said Jonathan Westhoff, the building society’s chief executive.
“At all times, we acted to ensure we were treating customers fairly and that our approach was in the best interests of the society and its members as a whole,” he said.
Mark Alexander from the Propety118 Action Group wrote recently on his organisation’s website that the court of appeal’s ruling “sends a clear message” to other lenders who have large numbers of customers on buy-to-let tracker mortgages.
John joined Eddisons in 1980 and as Head of Function for Agency, he manages business activities throughout the North of England. He is actively involved in the regional markets with owner-occupiers and property companies and developers. His development of close links to local communities over a sustained period has provided and maintained a constant source of instructions from professionals and business alike.
Significant project experience over three decades of service includes sales of 400,000 sq ft of industrial units on the Euroway Estate in Bradford to a number of logistics and manufacturing firms in a £13.5m deal. Further sales highlights include a 250,000 sq ft mill complex on behalf of receivers, and co-ordination for a recent project involving £10m of student block investment disposals.
John’s approachable and willing nature also ensures highly efficient client liaison and he acts on behalf of some of Eddisons’ major clients, including PPG Ltd, ISG plc, major banks and IPs to name just a few.
A passionate life-long supporter of his beloved Bradford City Football Club, John is happy to provide the benefit of his extensive knowledge, experience and contacts when discussing all things Valley Parade.