Vida Bank Limited · DRN-6245484

The complaint Mr T complained that Vida Bank Limited trading as Vida Homeloans wouldn’t give him a Buy To Let mortgage, because of concerns he had previously lived in the property. Mr T said that was nonsense, and also Vida should have thought about this before surveying the property. What happened Mr T lives overseas. He owns a UK property, which he lets out. Mr T applied to Vida to remortgage this property, but he was rejected. Vida said it wouldn’t offer him a Buy To Let (“BTL”) mortgage because it had concerns that he had lived in the property for a short time, before he moved overseas. Mr T said these suspicions were nonsensical. But he also said that if Vida was going to raise such concerns, it should have done so before a survey was instructed on the property. He’d paid for that survey, and he couldn’t get his money back. Mr T felt very strongly that by not making its checks, and reaching its conclusions that it would not lend to him before the survey was carried out, Vida had wasted his time, as well as that of all the other parties involved. This included his tenants who needed to provide access for this apparently unnecessary survey to be carried out. Mr T said the issue appeared to be that he’d used his rental property address as a UK correspondence address when he moved abroad. But he said he could prove he hadn’t lived there. He told us he had receipts for property he had rented overseas before he purchased his overseas home, and his phone could prove his location. And his tenants could also confirm he had never lived there. Mr T did then remortgage elsewhere, but he said that mortgage was more expensive. Vida didn’t think it had got things wrong here. It said it had considered data from Mr T’s credit file, and from the electoral roll. That all suggested he had lived in the property for a brief period. And Vida said that if Mr T had ever lived at the property, then he couldn’t have the BTL mortgage he’d applied for. He had to have a Consumer Buy To Let (“CBTL”) mortgage. At the time of Mr T’s application, Vida wasn’t able to offer him that. Our investigator thought this complaint should be upheld. He said Vida had warned Mr T that it would instruct the valuation as soon as he submitted the formal application for a BTL mortgage. So if Mr T had wanted the valuation to be delayed, his broker would have needed to ask for that, and there was no suggestion here that he’d done so. Our investigator didn’t think it was unfair for Vida to have carried out the valuation before underwriting Mr T’s application. Our investigator said he could see why Vida thought Mr T had lived at the property, but thought that Vida could have done more to consider Mr T’s explanation, and consider the application further. Our investigator looked at this evidence, and said there was no way to know for sure if Mr T had ever lived there, but he thought it was more likely he didn’t.

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Our investigator didn’t think Vida had properly considered this application, and he suggested it repay the application fee and survey fee, cover the increased costs of the mortgage Mr T got elsewhere, and pay £250 in compensation. Mr T accepted that, but Vida didn’t. It said its regulatory obligations at the time meant it wasn’t allowed to provide CBTL lending. It had asked the question “Has the applicant or a close relative EVER resided in the property since they have owned it?” and it looked to Vida as if the answer was yes. Vida didn’t think that was an unreasonable conclusion to have reached. A number of UK bank accounts in Mr T’s name were registered to that address, and he had been on the electoral roll there after he sold the property which had previously been his UK home. Vida said it had conducted a thorough internal review of the decision it had made, and it stood by that decision. It accepted what our investigator had said, that it wasn’t possible to be completely certain if Mr T had lived in the property or not, but it said this uncertainty carried risks for it. It didn’t think it was reasonable for our service to expect it to lend outside of its regulatory permissions, or to run the risk of doing so. Vida wanted this complaint to be considered by an ombudsman. Mr T said he still thought Vida should have considered the rest of his application before it commissioned the survey of his property. And he still thought Vida’s suspicions were ridiculous and unfounded. He said Vida had changed its policy since, so his application would have been accepted if it was made later. He thought that showed Vida had realised its policy was wrong or misapplied, and had changed it as a result of our service’s investigation. He said it would need some stretch of the imagination to see this as merely a coincidence. Mr T said if Vida had realised it was wrong, then he couldn’t understand why it wouldn’t just put things right in his case, but instead continued to waste everyone’s time. Because no agreement was reached, this case then came to me for a final decision. I then considered this case, and I reached a provisional decision. My provisional decision I issued a provisional decision on this complaint and explained why I did propose to uphold it. This is what I said then: Mr T’s complaint raises two separate points, I’ll deal with those in turn. The first is the order in which his application was considered. Mr T is firmly of the view that Vida should have considered his personal circumstances, decided whether the application could proceed, then commissioned the property survey and considered again whether the application could proceed. Vida has pointed out it does allow applicants to ask for the survey not to be commissioned right away, but Mr T’s broker didn’t do that. I can see that Vida followed its usual process here, and considered Mr T’s application as a whole, looking at both his personal circumstances and the property he wanted to use as security at the same time, to decide if it would lend to him. Although Mr T says that this must sometimes result in a survey being undertaken when it wasn’t necessary, which costs him money and disturbs his tenants, I think it will generally reduce the administration costs involved in checking an application. And I do also think it’s relevant here that Vida does allow its applicants to request the survey not be commissioned right

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away. Considering all of these factors, I’m not able to say that it’s either unreasonable or unfair for Vida not to have adopted the two-stage process Mr T would have preferred. The second point of Mr T’s complaint is the conclusion Vida reached on whether it could lend to him. He has described its concerns as nonsensical and ridiculous, and says he thinks Vida knew it had got things wrong, which is why it has since changed. Mr T says that Vida would accept his application if it was made now. But I don’t think the way Vida operates now is relevant to the decision it made in Mr T’s case. The provision of financial services is controlled by law – broadly speaking, firms can’t just decide for themselves which services they want to provide. Where a service is regulated, the firm has to register, and satisfy the appropriate authorities, before it can offer that financial service to its customers. Here, BTL mortgages are not regulated, but CBTL mortgages are. I understand that at the time Mr T’s application was made, Vida was able to provide BTL mortgages, and was planning to offer CBTL mortgages in future, but hadn’t yet completed the process of putting those in place. Although Mr T has referred to this as Vida’s policy, it goes rather beyond that. There are, as Vida has pointed out, significant risks to operating outside of the required regulatory permissions. At its extreme, this can be a criminal offence. Until it had the arrangements for offering CBTL lending fully in place, Vida continued to offer only BTL lending. And in doing that, it avoided any risk of operating outside of its permissions by checking if Mr T had ever lived in the property. If it thinks he has, even briefly, then it won’t offer him BTL lending. I appreciate that Mr T might think that Vida is worrying too much here, and taking an approach which is too risk averse. But I understand that in setting things out like this, Vida is following the structure of the underlying legislation. We know Vida didn’t yet offer CBTL lending at the time. So it had no mortgage product it could safely offer to Mr T. I understand that Vida could have done more to ask Mr T to explain the circumstances which led him to register himself as resident at this property on the electoral roll, rather than registering himself as an overseas voter. But I’m not sure this would ultimately have made a difference here. I have considered all the evidence Mr T has shown us, and, like our investigator, I think it’s more likely, on balance, that he didn’t live in the property. But I have also reached the same conclusion as Vida and our investigator on another key issue here – that whether or not Mr T ever lived in this property is not beyond doubt. Mr T doesn’t have direct receipts for accommodation covering all of this time, and he no longer has a copy of the tenancy agreement for the property for the relevant period either. I think that’s just unfortunate, but it does affect the outcome here. Vida didn’t think it could safely offer Mr T BTL lending on this property. And given that this key issue of whether he lived in the property still isn’t completely beyond doubt, I think it is reasonable for Vida to say, in circumstances where it could not be sure that Mr T hadn’t lived in the property for a brief period, it would prefer not to lend. But that doesn’t mean I think Vida should take no steps at all here. I do think Vida could

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have done more to check out the position here, and although perhaps not likely, it’s always possible that this would have put matters beyond doubt. And I also think it’s relevant that, in deciding not to lend, Vida was making a risk-based decision, which it may not have been easy for Mr T or his broker to foresee. For those reasons, I think it’s reasonable to say that Vida, not Mr T, should bear the direct and immediate costs of its decision not to lend to Mr T. So I will ask Vida to refund Mr T’s survey costs along with any application fee he paid, because I think that provides the fairest outcome in these very particular circumstances. But Vida doesn’t have to pay Mr T compensation, or cover any additional costs arising from his mortgage elsewhere. I understand that Mr T will be disappointed by my provisional decision, but I hope that the above more detailed explanation of the background to the decisions made in his case will mean he appreciates the reasons for this. I invited the parties to make any final points, if they wanted, before issuing my final decision. Both sides responded. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Vida replied to say it accepted my provisional decision, and agreed to provide the proposed redress. It welcomed that the decision recognised and accepted its position on the key regulatory issue, that at the time of the application it was unable to offer a CBTL mortgage and could not proceed with BTL lending where prior occupancy could not be ruled out. Vida said it was still satisfied that its lending decision here was appropriate, proportionate, and consistent with its regulatory permissions at the time. Vida also said it understood my concerns that it could have undertaken further checks to establish Mr T’s residency position. Vida wanted to stress that the valuation was instructed in line with its standard application process, before an initial assessment, but Vida said it accepted that, in the specific circumstances of this case, it was fair for it to bear the direct costs arising from the decision not to lend. And it noted I hadn’t suggested that it should pay compensation or consequential losses in addition to that. Vida said it would refund the valuation and application fees Mr T had paid. Mr T replied to disagree, and offer to provide more evidence. On the timing of the valuation, Mr T said that he appreciated the points I’d made about the usual process of approving a mortgage application, but said he still thought a responsible lender would at least have checked that the most important criteria for the approval of a mortgage had been met, before the valuation was done. I think it’s likely that Vida considered it had assessed the factors most likely to result in the rejection of Mr T’s mortgage application, because it will have carried out initial checks on his financial position before it provided a mortgage illustration saying how much it thought it could lend him. In my experience, it’s really not common for a BTL mortgage application to uncover evidence suggesting the landlord has previously lived in the property, and I don’t think it was unfair or unreasonable for Vida not to check for that, before it carried out the valuation of Mr T’s property.

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Mr T provided further explanation of his circumstances when he left the country and first lived overseas. He also said he now thought he could locate the original tenancy agreement for the property, which had been signed many years ago. But this would not be easy to obtain, so Mr T asked whether it would make a difference, before he put someone to the trouble of laying hands on it. I note Mr T’s further explanations, and the offer to source the original tenancy agreement. However, having given this further thought, I still don’t think this is likely to assist here. Vida had understood Mr T registered to vote at this property. Once a reasonable concern that Mr T has lived there has arisen, that is then difficult to refute, and Vida, as a lender who couldn’t yet offer a CBTL mortgage, has explained it was in a difficult position. Vida will be aware that providing false information to a registration officer can be an offence. I don’t think Vida would have been quick to conclude here that this is what Mr T had done. I think even if Mr T was able to show a tenancy agreement predating his registration at the property, it may still not be unreasonable for Vida to decide it’s likely Mr T could show links to the property, in the unlikely event that his registration was queried. I’ve noted above that the structure of the relevant legislation both supports and prompts the choices Vida made here. So I still don’t think Vida’s actions were entirely unfair or unreasonable. For those reasons, I haven’t changed my mind. I’ll now make the decision I originally proposed. My final decision My final decision is that Vida Bank Limited trading as Vida Homeloans must refund the valuation charge and any application fee that Mr T paid in this case. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr T to accept or reject my decision before 21 April 2026. Esther Absalom-Gough Ombudsman

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