Thousands of Buy to Let mortgage holders are due to share a £27.5 million pay out after a historic court ruling.
The ruling, from the Court of Appeal comes after the West Bromwich Building Society increased the interest rate paid by 6,000 Buy to Let investors in December 2013.
The hike saw tracker interest rates increased by 1.9% despite the Bank of England leaving base rate unchanged, at 0.5%, for years.
Challenging the decision, a group of investors took the building society to court and has now won their case, resulting in a refund of interest thought to be in the region of £4,000 per investor.
Commenting on the ruling Jonathan Westhoff, Chief Executive of the West Bromwich Building Society, said: “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,” said, the company’s chief executive.”
He continued: “We will now contact all affected borrowers and ensure we process promptly any reimbursement they are due.”
Interest rate rises
Buy to let investors with the West Bromwich Building Society were not alone. Bank of Ireland, Manchester Building Society and Skipton Building society all increased the interest rates they charged and it is now thought further legal action could be taken against these three institutions.
The largest of the three, Bank of Ireland, increased the interest rate on the tracker mortgage of some 13,00 borrowers, of which around half had residential mortgages on properties they lived in.
Commenting on the possibility of further action, Mark Alexander, who ran the campaign against the West Bromwich Building Society, said: He said: “We have barristers’ opinions saying they think the lenders are in breach of contract. Their mortgage conditions are not identical, so the case law can’t be used, but the situations are similar.”