Partially upheld: Mortgage advice complaints complaint against Vida Bank Limited trading as Vida Homeloans

Decision detail

Summary

R, a limited company, applied to Vida for a Buy To Let mortgage to purchase a property to operate as a five-bedroom HMO. Vida's valuer assessed the property as only meeting standards for four bedrooms due to one room falling short of minimum size requirements. Although R provided evidence of previous five-bedroom licensing and council confirmation that the property met five-bedroom standards, Vida declined the application. The ombudsman found Vida's decision to rely on the valuation was reasonable, as it was not unreasonable to decline to assume previous discretionary licensing would be repeated. However, the ombudsman found Vida's communication was unclear, initially emphasizing the lack of a current licence rather than the substantive space standards issue, causing R to waste time pursuing an appeal. The ombudsman awarded £150 compensation for this lack of clarity but rejected R's claim for full legal and broker costs.

The Ombudsman's reasoning

The ombudsman found that Vida acted reasonably in relying on its valuer's professional assessment that the property did not meet the letter of the local authority's space standards for a five-bedroom HMO, despite previous licensing and council confirmation. The ombudsman accepted that it was not unreasonable for Vida to decline to assume that discretion previously exercised by the local authority would be exercised again in future. However, the ombudsman found that Vida's communication was unclear, initially emphasizing the lack of a current licence rather than explaining the substantive space standards issue. This lack of clarity caused R to waste time and effort pursuing an appeal based on points Vida had already considered. The ombudsman rejected R's claim for full legal and broker costs, finding that R should have recognized the risk of lending being declined once the initial refusal was communicated. However, compensation of £150 was awarded for the wasted time caused by Vida's failure to clearly communicate its reasoning at an earlier stage.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website