Many property purchases involve financial assistance from family members. This is particularly common for first-time buyers who may receive help from parents or grandparents towards their deposit.
Whilst gifted deposits are common and entirely legitimate, conveyancers are required to undertake additional checks before the funds can be used in a property transaction.
Understanding what information will be required at an early stage can help avoid delays and keep your transaction moving smoothly.
A gifted deposit is money provided by a third party, usually a family member, to assist with the purchase of a property.
Common examples include gifts from:
Parents
Grandparents
Siblings
Other close family members
The funds must be provided as a genuine gift and not as a loan requiring repayment unless specifically disclosed and approved by the mortgage lender.
Solicitors are required to comply with anti-money laundering regulations and mortgage lender requirements.
When gifted funds are being used, we must verify:
The identity of the donor
The donor's address
The relationship between the donor and the buyer
The source of the gifted funds
That the funds are genuinely a gift and not a loan
That the donor will not acquire an interest in the property
These checks help protect all parties involved and ensure compliance with legal and regulatory obligations.
The donor will normally be asked to provide one of the following:
Current passport
Photocard driving licence
National identity card (where applicable)
Examples include:
Utility bill
Council tax statement
Bank statement
Mortgage statement
Documents are usually required to be recent and show the donor's current residential address.
Source of funds refers to the specific origin of the money being gifted.
Simply showing that the funds are in a bank account is not always sufficient. We may need to understand how those funds were accumulated.
Where funds have been accumulated over time, we may request:
Bank statements showing the build-up of savings
Evidence of salary payments
Where the gift originates from a property sale, we may require:
Completion statement from the sale
Bank statements showing receipt of the sale proceeds
Where funds originate from an inheritance, we may request:
Estate accounts
Correspondence from executors or solicitors
Evidence of receipt of inherited funds
Where funds originate from investments, we may require:
Investment statements
Sale documentation
Bank statements showing receipt of proceeds
Where funds originate from pension savings, we may request:
Pension provider statements
Evidence of withdrawal
Bank statements showing receipt of funds
Most transactions involving gifted funds will require the donor to sign a gifted deposit declaration.
This document typically confirms that:
The funds are an unconditional gift
The funds do not need to be repaid
The donor will not acquire any ownership interest in the property
The donor understands the nature of the transaction
Mortgage lenders frequently have their own specific requirements regarding gifted deposits.
Gifted deposits are one of the most common causes of delay in residential conveyancing transactions.
Delays often arise because:
Donors are unaware of the documentation requirements
Source of funds evidence is not readily available
Identification documents are provided late
Additional lender requirements emerge during the transaction
Providing the required information at an early stage can significantly reduce the risk of delay.
If you intend to use gifted funds, please inform your conveyancer as early as possible.
To help avoid delays, it is useful to have the following available at the outset:
Donor's full name and address
Proof of identity
Proof of address
Evidence of the source of gifted funds
Details of the relationship between donor and buyer
Early disclosure allows the necessary checks to be completed before they impact the transaction timetable.
Gifted deposits are a common and often essential part of modern property transactions. However, conveyancers are required to carry out specific checks to satisfy legal, regulatory and lender requirements.
If you are using gifted funds and are unsure what documentation will be required, please contact me at an early stage. I will be happy to explain the process and help ensure that the transaction progresses as smoothly as possible.