Many first-time buyers and home movers receive financial assistance from family members to help them purchase a property. This assistance is commonly referred to as a gifted deposit.
While gifted deposits are very common, conveyancers are required to carry out additional checks before the funds can be accepted and used in a property transaction.
A gifted deposit is money provided by a third party, usually a family member, to assist a buyer 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 the lender has specifically agreed otherwise.
Solicitors are subject to strict anti-money laundering regulations and lender requirements.
When gifted funds are involved, we must establish:
The identity of the donor
The relationship between the donor and the buyer
That the funds are genuinely being gifted
The source of the gifted funds
Whether the donor expects any beneficial interest in the property
Mortgage lenders also require confirmation that gifted funds do not create an undisclosed interest in the property which could affect the lender's security.
The exact requirements may vary depending on the transaction, but commonly include:
One of the following:
Current passport
Photocard driving licence
National identity card (where applicable)
Examples include:
Utility bill
Bank statement
Council tax statement
Mortgage statement
Documents are usually required to be recent and show the donor's current residential address.
Conveyancers must understand where the gifted funds originated.
Examples may include:
Personal savings
Employment income
Property sale proceeds
Inheritance
Investment proceeds
Pension withdrawals
Simply providing evidence of the bank account holding the funds may not always be sufficient. We may need to understand how those funds were accumulated.
Depending on the circumstances, we may request:
Bank statements showing the build-up of savings
Evidence of salary payments
Completion statement from the sale
Bank statements showing receipt of funds
Estate accounts
Correspondence from executors
Evidence of receipt of inheritance funds
Investment statements
Sale documentation
Evidence of receipt of proceeds
Pension provider statements
Evidence of withdrawal
Bank statements showing receipt of funds
The donor will usually be asked to sign a gifted deposit declaration confirming 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 often require specific wording to be included within the declaration.
Gifted deposits are one of the most common causes of delays in residential property transactions.
Delays often occur because:
Donors are not prepared for the identification requirements
Source of funds evidence is not readily available
Documents are incomplete or unclear
Additional lender requirements arise
Providing the requested information at an early stage can significantly reduce delays.
If you intend to use gifted funds, it is helpful to inform your conveyancer as early as possible.
Buyers should be prepared to provide:
The donor's full details
Identification documents for the donor
Proof of address for the donor
Evidence of the source of gifted funds
Information regarding the relationship between the donor and buyer
Early disclosure allows the necessary checks to be completed before they impact the transaction timetable.
Gifted deposits are a common and entirely legitimate way of helping family members purchase property. However, conveyancers are required to undertake 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 so that I can guide you through the process and help avoid unnecessary delays.