MTF (NH) Limited · DRN-5737939

The complaint Mr K’s complaint relates to damage that was caused to his property in 2024 while it was in the possession of MTF (NH) Limited, his former lender. What happened In February 2022 Mr K took out a bridging loan with MTF. He borrowed £150,000 over twelve months. The interest that accrued was rolled up onto the debt and so the loan facility was for just over £167,000. The funds were to repay the existing mortgage on the property, repay some unsecured debts Mr K had, and pay for the property to be renovated. MTF has confirmed that Mr K told it that at the end of the year the property would be sold in order to repay the loan. Mr K didn’t repay the loan in February 2023. MTF gave Mr K time to try to refinance the loan, but he was unable to. In July 2023 MTF started legal action and it was granted a possession order in October 2023. When Mr K did not hand the property over as was required by the court order, MTF pursued the matter, and bailiffs took possession of the property on 8 January 2024. By this point, Mr K had made some capital repayments, but there was still around £120,000 outstanding on the loan. Following repossession, MTF appointed a property management company to deal with the property. That management company arranged for the property to be inspect it and any action needed to reduce the risk of damage to it due to it being unoccupied to be taken. This would usually involve removal of any potentially hazardous substances and draining down the water and heating systems. On 12 January 2024 Mr K’s tenant (and the builder who was renovating the property before repossession) was allowed access to the property to collect some of his possessions. At this point it was discovered that there was water leaking from the radiator in the bathroom. The management company had an emergency plumber attend the property, which identified that the stop cock in the property was faulty and was letting a slow flow of water through. This had allowed the water and heating systems to slowly refill. The faulty part of the water system was replaced by the plumber on the same day and the water and heating systems were again drained. It was assumed by MTF at that time that water had been able to exit the radiator due to the bleed valve not being closed. Later MTF said the bleed valve had also been faulty, which is why the leak had occurred when the system had refilled. Mr C’s tenant sent him a text on 12 January 2024 which said ‘when we got to inside the house with [name of management company agent], there’s a leaking from radiator. All kitchen ceiling and floor soaking and a lots damages. Plumber’s fault. Radiator bathroom.’ Two days later Mr K texted the management company asking for access to the property on 15 January 2024, for a period of two hours. The member of staff said that they were not available on the requested day. She also confirmed that the tenant had asked for further access the following Monday and that she needed permission from the MTF’s solicitors before she could agree to any access.

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Mr K emailed on the morning of 15 January 2024 and explained that he was not happy about not being given access when he wanted it. He also said that he wasn’t happy that MTF had not notified him that the leak had occurred. He said that he had arranged for a specialist to attend the property to assess the damage that day, and asked for confirmation of what time he would be able to have access. He said he had provisionally booked the specialist to attend at 10am that day. It was confirmed that Mr K could have access on 16 January 2024 at 10am. He was asked to confirm that this was a suitable time for him. Mr K responded later that evening to say that 10am was not convenient, and he suggested 12 noon. He also said that two hours would be sufficient time to have the assessment done. On the same day Mr K’s tenant emailed him. He told Mr K that when the leak had been discovered he had turned the stopcock anticlockwise, which he was later told by the plumber who attended had been the wrong thing to do. This would have been because it would have opened the valve rather than closing it. The tenant confirmed that he had most of what he needed from the property in the way of clothing, medication, personal possessions and tools. Mr K’s mortgage broker also contacted MTF on 15 January 2024. It said that Mr K was ‘not very happy that his house was flooded by an incompetent plumber and no one has even got back to him!’ Early on 16 January 2024 MTF’s solicitors confirmed that Mr K’s proposed time for admittance was fine and access had been arranged for him. Mr K and his tenant/builder attended the property and was met by the same agent from the management company as had been at the property on 12 January 2024. Mr K recorded the conversations that took place without the agent’s knowledge or permission. The agent was not expecting the tenant to be attending the property that day. It also appears that she had not been told that Mr K wanted to have access for two hours and that he was intending to have an assessment of the water damage completed. She contacted MTF’s solicitors and confirmed that Mr K did not have permission to complete any opening up in order for the impact of the escape of water to be assessed. Mr K said he would cancel his specialist, as there was no point in them attending. During the subsequent conversation, it was confirmed to Mr K that the stopcock controlling the flow of water into the property had been faulty, which meant that after it was turned off, it allowed a small amount of water to pass. When Mr K asked about drying out the property, the agent said it had been a small leak and that not much water had been evident, and that it had already almost dried out. Mr K’s tenant did not dispute this account. Mr K said he would reschedule having the damage assessed. The report from the emergency plumber confirmed that it had completed repairs that allowed the water to the property to be cut off. The water systems were then again drained down. Mr K made further payments to MTF and repaid the remaining loan balance on 24 January 2024. The property was handed back to Mr K on 27 January 2024. Mr K complained to MTF on 5 March 2024 about the damage that had been caused by the escape of water and that caused to the doors when the bailiffs had accessed the property on 8 January 2024. On 29 April 2024 MTF’s contractor attended the property. The report produced only commented on the damage to the kitchen ceiling. It said that the ceiling was dry and, while there were some cracks, the ceiling was repairable. The report went on to confirm that the

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remainder of the textured coating needed to be removed, it needed skimming and painting. The cost of the work amounted to £740. Mr K also had a report done on the damage to his property at the end of April 2024. This identified that there was damage to the bathroom wall and floor, with corresponding damage on the opposite side of the wall the radiator was mounted on. In addition, there was damage in the kitchen below and the landing. Mr K’s assessor confirmed that in addition to the leak from the radiator, another one was identified on the kitchen sink. It recommended that multiple driers be installed for three weeks. It also said that the repairs for the damage caused by the two water leaks would cost, with VAT, more than £13,000. No breakdown of the costs was included in the report as would be expected. MTF responded to Mr K’s complaint in the early part of May 2024. It upheld the complaint in part. MTF rejected a complaint about damage to the doors caused when the property had been accessed by bailiffs as this had been unavoidable, given that Mr K had not given them access as the court order required. In relation to the water damage, MTF confirmed that the stopcock was faulty and this had allowed water to re-enter the heating system after it had been drained down. This, combined with a radiator bleed valve having not been closed, allowed water to escape into the bathroom. MTF confirmed that its contractor had determined that the only damage was to the kitchen ceiling. It offered to arrange for the necessary repairs, or to pay Mr K £750 to allow him to complete them himself. Further correspondence was exchanged over the following months and in July 2024, MTF’s solicitors re-presented its offer to Mr K. It also said that the damage had been caused because of faults on the water systems in the property that existed prior to repossession. It was confirmed that while initially it had believed the leak from the radiator was due to the bleed valve having not been closed, it had since determined that the valve had been faulty. The solicitors said that the leak would reasonably be described as a ‘trickle’ and had only happened for three to four days, so not much water would have been emitted and would have dissipated within a week. In summary, it said that MTF was confident that the damage caused by the water would have been minimal. Mr K was not satisfied with the response he received from MTF and referred his complaint to this Service. When we informed MTF that this had happened, it highlighted that the leak had been a minor one and had only occurred for a few days, as such, it was not possible that it could cause the amount of damage Mr K was claiming for. Around the same time, Mr K made a claim on his property insurance policy. He confirmed to the Investigator in December 2024 that the claim had been accepted, and the insurer would be repairing all of the water damage he had claimed for. Subsequent information Mr K provided confirmed that he had needed to pay a policy excess of £450. One of our Investigators considered the complaint. Given the difference in the scope of the damage that had been claimed for and accepted by MTF, he considered the evidence and concluded that MTF needed to pay for more repairs than it had done so, but not all of the repairs that Mr K had claimed for. This was due to the fact that Mr K’s own report confirmed there was a secondary source of damage, which appeared to be the cause of much of the damage in the kitchen. He set out the areas of damage he thought MTF should cover the repairs for. It accepted the wider scope of repairs the Investigator had suggested and it also decided that it should pay Mr K some compensation for any inconvenience he had suffered due to the situation. MTF increased its offer to £2,500. The Investigator set out the offer to Mr K and recommended that he accept it. Mr K did not accept the Investigator’s conclusions. He set out why he thought the outcome was wrong and said that the Investigator had omitted what he regarded as an important

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aspect of the complaint – ‘bad faith’ on the part of MTF in its dealings with him as it had been ‘duplicitous and dishonest’. Mr K highlighted the interactions with MTF’s representatives in relation to access to the property on 16 January 2024. In addition, Mr K said that we had misunderstood the content of his loss report, as the second leak had been trivial and did not contribute to the damage – he did not provide any evidence from the experts to support this statement. Mr K also said that when his tenant/builder had attended the property on 12 January 2024 water had been ‘gushing’ out of the radiator. While the Investigator considered what Mr K had said, he was not persuaded to change his conclusions. As such, Mr K asked that the complaint be referred to an Ombudsman. I issued a provisional decision on 11 July 2025, in which I set out my conclusions and reasons for reaching them. Below is an excerpt. ‘The core of Mr K’s complaint is that he believes that MTF should be paying for all of the water damage identified to his home. Whereas MTF did not agree to do so – initially only being willing to pay for repairs to the kitchen ceiling and later, after our involvement, for the damage that was clearly caused by the bathroom escape of water. However, that discussion is now moot. I say this as all of the damage Mr K asked MTF to cover, and more, has been covered by the insurance claim Mr K made. So there is no longer any damage for MTF to repair, or pay to repair, and I can’t make an award in this respect. As such, I do not consider that the offer made by MTF is appropriate in the circumstances. That said, the fact that the insurer has settled the claim does not mean that Mr K has not suffered a financial loss. The information he has provided from his insurer shows that he paid a £450 excess when the claim was accepted. I consider that it would be appropriate for MTF to reimburse this sum to Mr K and to add simple interest at 8% per annum from the date he paid the excess to the date of settlement. Mr K will need to evidence the date of the payment for the interest to be calculated. If Mr K accepted a cash settlement for the insurance claim, the interest calculation should start on the day the settlement was made by the insurer. In addition, the fact that there has been an insurance claim will affect Mr K’s insurance premium going forward for a period. I do not know if Mr K renewed his insurance with the same insurer, or chose to move to another one. Either way, the renewal premium or new insurer premium would have been higher than it otherwise would have been, had no claim been made. Mr K will have to continue to declare the claim in the future if he takes out a new policy. Most insurers will ask for claims information for the previous three to six years, with a significant proportion asking for five years claims history. Mr K will need to ask his current insurer to confirm how much the claim added to his premium for the policy year that started after the 2024 claim was accepted. The amount of the rating due to the claim will change over time, it can’t be known what those changes will be in advance. I could ask Mr K to complete the same exercise for the next four years, but the administration of this would potentially lead to further problems. As such, I propose that it is assumed the same rating amount will be applied to Mr K’s insurance for the next four years. This will allow a line to be drawn under the matter. As such, I am minded to require MTF to pay Mr K a sum equal to five times the amount of Mr K’s most recent insurance premium that can be directly attributed to the 2024 escape of water claim having been made. I do not intent to award interest on any amount already paid, as this will be more than balanced out by the amount that Mr K will be receiving in advance for the future years.

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I think it is at this point it would be appropriate to explained that the Financial Ombudsman Service doesn’t supervise, regulate or discipline the businesses we cover. My role isn’t to punish or penalise businesses for their performance or behaviour – that’s the role of the regulator – the Financial Conduct Authority. My role is to determine whether a financial business has treated its customer fairly. Mr K has said that he considers MTF and its representatives were ‘duplicitous and dishonest’. I have considered the information Mr K and MTF have provided, and I am satisfied that there were communication problems surrounding access to the property while it was still in MTF’s possession. I think this may well have come about from a misunderstanding on Mr K’s part about his rights in relation to the property. When a property is taken into possession, the borrower and in this case, his tenant, would be expected to be able to access the property in order to remove their personal property – furniture, clothes, etc. However, this does not mean that the borrower would be entitled to access to the property at any time they wanted. Access would need to be mutually convenient for both the borrower and the management company. So the fact that Mr K was not able to have access the following day when he requested it because there was no-one available to supervise his visit was not unreasonable. We would also expect the lender to keep the borrower informed about what was happening with the property, i.e. that it was being placed on the market for sale, that it had sold, and for how much. However, the lender would not be expected to ask for input from the borrower before making a decision and the borrower would not have the right to interfere with what the lender was planning for the property. As such, Mr K could ask if it could take someone into the property to assess what damage had been caused by the escape of water, but he was not entitled to do so. So while he should have been told earlier that MTF was not willing to allow him to bring in a company to assess the damage to the property, I can’t find that it was wrong not to agree to it happening. It is clear that the fact that there were escapes of water in his property is again likely to have caused Mr K some inconvenience. However, based on the information available to me, including the photographic evidence, while the damage happened while MTF was responsible for the building, it would appear that it was the poor condition of the plumbing system that was the primary cause of the problem and that is not something MTF can be held responsible for. That said, I accept that the poor handling of the communications and not managing Mr K’s expectations when they should have been, clearly caused him some annoyance and inconvenience. I am minded to award £250 compensation in this regard. ‘ MTF did not accept my provisional decision. It said that as I had acknowledged that there were underlying problems with the condition of the water systems in Mr K’s property, the complaint should be rejected, as those problems were the cause of the damage. MTF went on to say that my provisional decision was flawed and the award proposed unjustified. This was because all of the costs of damage had been covered by Mr K’s insurers. MTF said that the award regarding the increased premium is open-ended and ambiguous. It also said that it considered there was the possibility that Mr K might choose an expensive insurance policy to make MTF pay as much as possible. MTF said that it considers my proposed redress can only be considered as punitive. MTF subsequently clarified its comments. It said that it was not objecting to the complaint being upheld, but rather that I had offered no rationale as to why I was upholding the complaint. MTF confirmed that its response to the provisional decision should not be taken as it changing its position on the complaint, it was simply asking for clarification.

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Mr K did not accept my provisional decision as he considers that it is ‘incorrect as a matter of law, precedent, and the principles of natural justice’. He said that as the insurance policy was an arrangement that did not involve MTF, and the payment under that contract was due to him having paid premiums to the insurer. Mr K considers that as this is the case, the payout under the insurance policy should be considered to be money paid out from his own resources and the rule against double recovery should not be applied to the situation. He went on to say that for MTF to be rewarded and him, the victim, punished, offends the most basic principles of natural justice. Mr K detailed four personal injury claim court cases in support of his position about the insurance claim not being taken into account when redress was considered. In addition, Mr K reiterated that he considers MTF engaged ‘in bad faith and dishonest practice’. As such, he thinks that I should place little weight on the evidence provided by MTF unless there is secondary supporting evidence. He went on to comment on what MTF had said and the information it had provided relating to the damage. Mr K also said that his complaint was not that MTF unreasonably denied his expert access to assess the damage, but rather that it had agreed access and then it was denied. Mr K also stated that my provisional decision was inaccurate. He said that my statement that there was a second leak on the water systems was incorrect, and I had misinterpreted the report from his expert – the second leak had not caused any damage, which he evidenced by a telephone recording provided to the Investigator. He also highlighted that the inspection his report was based on was undertaken on 18 April 2024, not at the end of April, as I had said. 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. I would firstly apologise to Mr K for any confusion regarding my reference to his expert report. I was not referring to the date of the inspection. The date of the inspection was clearly detailed on the report as 18 April 2024. From experience of cases that involve expert evidence of this nature, such reports will take time to be written up and sent to the commissioning party. Hence my reference to the end of the month in which the inspection took place. I did not confuse the report with the date of MTF’s inspection, as that was documented in the background separately. As for Mr K’s concern that I had referenced there being a second source of escaping water, that was documented by his expert. If that escape of water had not caused any damage, I would have expected the expert to have documented that. It did not do so in the initial report, and it did not either revise the report or provide a written statement to that effect, as would be expected. That said, I do not consider it affects the outcome of this complaint. It would only be relevant if I needed to determine the scope of the damage MTF needed to pay Mr K for. Due to Mr K’s insurer paying for all the water damage in the property, I don’t need to do that. Mr K has mentioned the concept of subrogation by his insurer. This is where an insurer will recover the cost of an insurance claim from a third party it considers is responsible for the damage the insurance claim covered. My conclusions would not prevent Mr K’s insurer from pursuing MTF for the costs associated with the claim. Whether Mr K’s insurer chooses to pursue MTF for the amount it paid out under the insurance claim is a matter for it to decide. However, were I to require MTF to make a payment for the damage that has already been covered under the insurance claim, that may well prevent Mr K’s insurer from pursuing MTF

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for the costs of the claim and would likely mean that the insurer would require Mr K to pass any payment made to it. I would explain to MTF that when a complaint is received by this Service where a financial business has accepted that it is liable for the event complained about, this Service will not generally question that position. That was the situation in this case and MTF had made an offer of redress. As such, I did not need to consider whether MTF was liable for having caused damage to Mr K’s property. Rather my consideration related to the matter that was in dispute – the redress that MTF should reasonably pay. As I concluded that the redress offered by MTF prior to the complaint coming to us was not appropriate in the circumstances, the complaint would be considered to be an uphold. I hope this clarifies matters for MTF. MTF has confirmed that it has not changed its position on the case, which I take to be that it is not withdrawing its acceptance of liability for the damage to Mr K’s property. However, given MTF’s submissions, I will comment on the matter of liability. As I set out in my provisional decision there were existing problems with the water systems in Mr K’s property. However, there is no suggestion or evidence that there was a leak from the bathroom radiator prior to MTF taking possession, nor is there any suggestion that there would have been but for the actions MTF had taken in order to drain the water systems. As such, I am satisfied that MTF made an appropriate decision when it decided to accept liability for the escape of water and the damage caused. Mr K has put forward that I am wrong in my conclusions that it would be inappropriate for MTF to be expected to pay for damage that has already been paid for by his insurance policy. In support of this position, he has highlighted four legal rulings that relate to personal injury cases. A simple summary of these cases says that where a person receives benefits from an insurance policy or disability pension (that they have paid towards) due to the physical impairment caused by the defendant, those benefits should not be deducted from the damages paid by the defendant. Effectively, the court cases set aside the general principle that a claimant cannot claim for the same loss twice in some circumstances. Mr K has also stated that MTF was not involved with the insurance policy. However, that is not strictly the case. While Mr K did arrange the policy himself and paid the premiums, it was a requirement of the bridging loan that a property insurance policy be in place and that MTF’s interest was noted on the policy. I would thank Mr K for the detailed research he has provided, and I can assure him that I have considered what he has said carefully. We are not a court of law, and while we take the law into account when making our decisions, our jurisdiction is a fair and reasonable one. I am not persuaded that the cases Mr K has brought to my attention relate directly to this case and mean that it would be reasonable for him to effectively be paid twice for the same loss. I would reiterate that when determining what the appropriate form of redress for financial loss is, we look to place a consumer in the financial position they would have been in, but for the error made on the part of the financial business. In this case, that is Mr K having a property that has been returned to the same condition it was in before the escape of water. Mr K is already in that position in relation to the physical damage that was present in his property when it was handed back to him. However, due to the insurance claim having been accepted, Mr K had to pay the insurance excess and will be paying higher premiums at the five renewals following the claim being made. That is an outstanding financial loss that MTF needs to compensate Mr K for. While MTF has said it considers this award is punitive, it simply places Mr K in the position he would have been in, but for the damage caused to the property following MTF’s actions while the property was in its possession.

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I note that MTF has said that it is concerned that Mr K might purposely take out an expensive insurance policy at renewal in order to make MTF pay out as much as possible. I can understand that concern, however, given that Mr K’s insurance policy would have needed to be in place before the escape of water occurred, that means it would have started/been renewed at some point in 2023. As such, it would have renewed or been replaced before I issued my provisional decision. So, Mr K could not have deliberately taken out an expensive policy to disadvantage MTF as he would not have been aware of my proposed award when he decided to either renew his policy or what new policy to take out. Mr K has reiterated his concerns about the behaviour of MTF during its interactions with him. He has not added anything new to his concerns or provided additional evidence. I have reviewed all of the evidence in relation to this matter, and having done so, in the absence of any new evidence, I don’t propose to change the conclusions I set out in my provisional decision on this issue. Putting things right MTF should: • Reimburse the £450 insurance policy excess Mr K paid his insurer. If Mr K provides evidence of the date of payment of the excess, or if the claim was cash settled, the date that happened, *interest should be added to this sum from the “date of payment” to the date of settlement. • Upon Mr K providing evidence from his insurer about how much his premium was increased by due to the claim made in 2024, MTF should pay five times that sum to Mr K. Due to the fact that Mr K will receive settlement in advance for at least three of the years the redress will cover, I do not propose to add interest for the one or possibly two years that have already been paid. • Pay Mr K £250 compensation for the distress and inconvenience this matter caused. *Interest is at a rate of 8% simple per year and paid on the amount specified and from/to the dates stated. If MTF considers that it’s required by HM Revenue & Customs to deduct income tax from any interest due to Mr K, it should tell him how much it’s taken off. It should also give Mr K documentation confirming this to be used for HM Revenue & Customs purposes. My final decision My final decision is that I uphold this complaint. In full and final settlement of the complaint, I require MTF (NH) Limited to settle the complaint as I have detailed above in ‘Putting things right’. Under the rules of the Financial Ombudsman Service, I am required to ask Mr K to accept or reject my decision before 3 October 2025. Derry Baxter Ombudsman

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