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Landmark West Bromwich BS Ruling Favours Landlords


A landmark ruling by the Court of Appeal has found in favour of a group of 400 landlords who launched a class action against the West Bromwich Building Society.

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Controversial Clause The case pivots on a controversial clause in West Bromwich Building Society’s buy to let mortgages issued up to 2008. Property investors and landlords who took out mortgages during this period thought they had bought a product that tracked the Bank of England base rate.

Interest rates fell to a historic low of 0.5 per cent in March 2009, which should have been cause for celebration. Unfortunately, in 2013 the West Bromwich Building Society took advantage of a clause in the small print. This allowed them to change the agreed interest rate. Any landlords with three or more buy to let properties saw the interest rate on their mortgage products rise by two per cent. This has a significant effect on some landlords, with the repayments doubling in some cases.

Class Action Many landlords were deeply unhappy at what they perceived to be an unfair change to the terms of their mortgage, so the case was referred to The Financial Ombudsman. He found in favour of the West Bromwich, so a group of 400 landlords (led by the property118 website) began a Class Action against the building society.

The commercial division of the High Court ruled in favour of the West Bromwich, but this has now been overturned by the Court of Appeal. 6,250 landlords are now in line for a refund of monies overpaid. This will cost the building society an estimated £27 million.

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