Buy-to-let investors win mortgage cut

UP TO a million buy-to-let property investors could see their mortgage payments drop after the Court of Appeal ruled that a group of landlords should be treated as ordinary borrowers, not investors.

The 350 landlords who brought the case, led by Mark Alexander, a property investor, argued that West Bromwich Building Society’s decision to raise the rate on their “tracker” mortgages was unlawful.

Mr Alexander said there are thought to be about one million tracker buy-to-let mortgages and yesterday’s ruling sets a precedent.

“Tracker” mortgages are supposed to rise and fall in line with a central interest rate. But West Bromwich had argued that small print in its contracts entitled it to raise rates even when the Bank Rate was stable.

The Society has now agreed to reimburse borrowers and reset mortgage rates to a lower level. The cost to the mutual’s savers and borrowers will be £27.5 million, the society said.

In December 2013, the building society raised the rate on tracker mortgages for 6,250 landlords by almost two percentage points – despite there being no change in Bank Rate, which has remained at 0.5pc since early 2009. This more than doubled many people’s monthly payments.

The society said in a statement that it had acted in the best interests of members as a whole, as savers, “the vast majority of the Society’s members”, had seen “a dramatic fall in income”.