20 Essex Street’s Michael Ashcroft QC secures successful judgment to prevent lenders varying buy-to-let “tracker” mortgages rates at will

20 Essex Street acted on behalf of the Claimants in Mark Alexander v West Bromwich Mortgage Company Ltd

The Court of Appeal has ruled in favour of the Claimant in this high profile representative action affecting over 6,200 policyholders of the West Bromwich Mortgage Company Ltd (“the Lender”) and setting a precedent across the national buy-to-let market.

Michael Ashcroft QC appeared for the successful Appellant (“the Borrower”) in a dispute concerning buy-to-let “tracker” mortgages and the circumstances in which the Lender could vary the applicable rates of interest and terminate mortgage contracts.

Accepting Mr Ashcroft’s arguments (and disagreeing with the previous analysis of Mr Justice Teare and prior decisions by the Financial Ombudsman Service), the Court of Appeal has held that clauses in the Lender’s standard mortgage conditions, upon which it sought to rely to vary the applicable rates of interest at its discretion and as giving rise to a right to terminate the mortgage contracts on one month’s notice, were inconsistent with central terms of the mortgage offers and were therefore not incorporated into the contracts.

The judgment of Hamblen LJ contains a very clear analysis of the proper approach as a matter of contractual construction to questions of inconsistency and inconsistency clauses. The decision is also understood to be of wide significance in relation to “tracker” mortgages more generally, since several other lenders have apparently sought to vary “tracker” rates, otherwise than strictly in accordance with changes to the underlying base rate, relying upon broadly similar clauses to those that the Lender sought to invoke in this case.

The appeal comes after Mr Justice Teare rejected claims that the Lender illegally increased its tracker rates for buy-to-let customers in the Commercial Court in January 2015.

Michael Ashcroft QC says:

“This case is very significant for both lenders and landlords as it will set a precedent across the buy-to-let market in this country.”


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