Buy-to-let landlords win multimillion pay out from West Bromwich
A member of the UK200Group of independent chartered accountancy and law firms, has commented on news that thousands of buy-to-let landlords will share a multimillion-pound payout after winning a ‘David and Goliath’ legal battle against one of Britain’s biggest building societies. Court of appeal judges have ruled that the West Bromwich was not legally entitled to vary the landlords’ mortgage interest rates in the absence of a change in the Bank of England base rate, which their home loans track until the end of the term. West Bromwich building society has been left with a £27.5m bill after being defeated in the court of appeal – but it said this “will not put the society in financial difficulty, our financial position remains very strong.” The action group that fought and won the case said the ruling sends a clear message to other mortgage lenders that might have considered following suit.
Jonathan Russell, partner, UK200Group member firm ReesRussell, said:
“It is good to see a court ruling that banks, and it could be said of any organisation, cannot arbitrarily vary the conditions of a contract purely for their own purposes. A contract is a contract and unless all parties agree it should not be varied unless the contract allows for such change. This was a case where the change was not allowed. The society said it will repay those effected but I imagine some claims will follow for the financial hardship that may have arisen and potentially for some of the tax consequences that will impact on the borrowers. The losses and costs to the borrowers could well be much more than the extra interest charged.”