Gifted deposits: why your solicitor needs so much proof

If a family member is helping you buy a home, you may be surprised by how much paperwork your solicitor suddenly wants, bank statements, ID, proof of where the money came from, sometimes going back years. It can feel intrusive, even insulting to the person being generous enough to help. It is worth knowing, before you start, that this is entirely normal, that it is a legal requirement rather than your solicitor being difficult, and exactly what you and the giver will need to provide.

What is a gifted deposit?

A gifted deposit is money given to you by someone else, usually a parent, grandparent or other close relative, to put towards the deposit on a property, with no expectation of being repaid. To count as a genuine gift, it must be unconditional: not a loan, and with no claim on the property by the person giving it. There is no upper limit, and in principle your entire deposit can be gifted. Family help on this scale is now part of how the market works: so-called “Bank of Mum and Dad” support is behind around half of all first-time buyer purchases.

Why does it involve so much paperwork?

This is the part that frustrates people, so it is worth being clear about. Your solicitor is required by law, under the money laundering regulations, to check the source of funds going into a property purchase. They are not choosing to be nosy, they face serious professional and even criminal consequences for failing to carry out proper checks. When a chunk of your deposit has come from someone else, the law requires your solicitor to satisfy themselves that the money is legitimate and genuinely a gift. The requests for statements and ID are how they meet that duty. A firm that did not ask these questions would be the one getting it wrong.

What you’ll need to provide

The exact requirements vary between firms and lenders, with some asking for more than others, but you can expect to need most of the following:

• A signed gift letter from the person giving the money, confirming their name, your name, the amount, your relationship, and that it is an unconditional gift that does not need to be repaid and gives them no stake in the property.
• The giver’s photographic ID (passport or driving licence) and proof of their address.
• The giver’s bank statements, usually covering three to six months, showing the money and where it came from.
• A clear paper trail showing the gifted money moving into your account, and then on to your solicitor.

Some firms charge a small additional fee for the extra work a gifted deposit involves. It is worth asking what evidence will be required, and whether there is a fee, when you first get conveyancing quotes.

Lender requirements vs solicitor checks

Two separate sets of requirements often get muddled together. Your mortgage lender needs to be satisfied the deposit is a genuine gift and not a loan that affects what you can afford, they usually ask the giver to sign their own gift declaration. Your solicitor, separately, has to carry out the anti-money-laundering checks on the source of the funds. They are different organisations meeting different obligations, which is why you can find yourself providing similar information twice. It helps to know this is normal rather than duplication gone wrong.

Where the money came from matters

What your solicitor needs depends on where the gifted money originated. Long-held savings shown building up in statements are the most straightforward. Money from a recent property sale needs the completion statement; an inheritance needs the grant of probate and a letter from the executors. Gifts from abroad are the most involved: they typically require certified translations of statements and fuller evidence that the money was legitimately earned, and some lenders will not accept funds from certain countries at all. If the gift is coming from overseas, allow extra time and flag it early.

What causes gifted-deposit delays?

Most delays are avoidable and come down to a few common mistakes. The biggest is not mentioning the gift early enough, the documentation can take weeks to gather, particularly from an elderly relative or one living abroad, so tell your solicitor and mortgage adviser at the very start. Trying to keep the gift quiet does not work either: a solicitor who spots an unexplained deposit will ask about it, and cannot simply ignore it. Nor does moving the money into your account months in advance avoid the checks, your solicitor will still trace it back. The smoothest route is to be open from the outset and get the giver’s paperwork ready early. Our guide to how long conveyancing takes explains where this fits into the wider timeline.

Is there tax to pay on a gifted deposit?

There is no tax to pay simply on receiving a gift, but there is one thing the giver should be aware of, because your conveyancing solicitor will not advise on it. A cash gift is treated for inheritance tax purposes as a “potentially exempt transfer”: if the person giving it survives for seven years, it falls outside their estate entirely. If they die within seven years, the gift may be counted as part of their estate when inheritance tax is worked out. For most families this is not a concern, but where larger sums or larger estates are involved it is worth taking proper advice. You can read the basics on the GOV.UK guide to gifts and inheritance tax, and our inheritance tax and estate planning team can advise the giver separately if needed.

How we help

Our conveyancing team handles gifted deposits every day for buyers across South Wales and the South West. We tell you upfront exactly what we and your lender will need, so you and your family can get the paperwork ready without last-minute stress, and we keep things moving once it is in. To get started, request a callback and we will come back to you.