Surveys and arrangement fees. Are they a scam?

[MILLYMOLLYMANDYMAX]

So angry.
I have a small (27sq metres) 1 bed flat in London. I have renovated it and it is stunning inside. Oak flooring, White walls and limestone shower room. 125 year lease, and a 30ft private garden It is currently rented out for in excess of £1K per month. In May I approached my current mortgage company to remortgage to get money out to pay off some credit cards (renovation was a nightmare, everytime we did one thing we found more problems and stuff we had not budgeted for.) We also wanted to buy the next flat. Didn't think there would be a problem, flat had plenty of equity in it and the rental income would be more than adequate to cover the mortgage company's requirements. We paid the arrangement fee and waited, answering any questions that they needed to know the answer to. After 2 1/2 months and them knowing exactly our position from day 1 we were declined the remortgage because we owed too much money.
Annoyed but thought we would try a different mortgage company. Started again. First problem was the size of the flat. A lot of mortgage companies, wouldn't mortgage anything under 30sq m. Finally found one that did. Said they had no limit on size, no problem with credit card debt. We were completely upfront on size of flat asking several times that they did give mortgages on properties which were small, 27sqm. Again paid arrangement fee and survey fee.
Survey came back today. Despite someone already renting the property, and the fact the MC saying there would not be an issue with the size the surveyor has come back to say the value is £0 as the flat is too small and is no more than a crash pad. Apparently they sent a surveyor from Northamptonshire. We have spent nearly £800 on arrangement fees and surveys only to be told no because of an issue the companies were made perfectly aware of before hand.
Am I being scammed here? Has anyone else had an issue with surveyors or mortgage companies?