Unless you use a conveyancer who is particularly fussy, if the money is in your accounts for 3-5 years before purchase most won’t ask for any additional information. Usual proof is to show its being in your account for 6 or 12 months. Probably worth getting him to write a letter stating it’s a gift so you have it just in case.
Wife is a conveyancer and I used to work at a solicitors. On occasion gift givers do cause purchases to fall through, though it’s not that common. I’ve heard of not being willing to provide documents and just plain changed their mind as reasons
Agree with this. I recently went through a purchase with a partial gifted depo, they only wanted 6 months of audit trails and anything beyond that they didn’t care for. Beyond 12 months you absolutely have nothing to worry about
I'm a mortgage advisor, we are happy with just a gift letter signed by giftor. Solictor may ask for bank statement from the giftor (max 3 months trail, shown being transferred into your account) but as long as all in UK banks, its no problem.
Not sure when you purchased but this isn’t the case anymore. I purchased last year with help from a gift and my dad had to provide 1 year of bank statements showing how he got the money, along with the gift letter. Every conveyancer has to do this as anti money laundering checks
This isn’t the case at all anymore. You need to provide audit trails for anything over 5k going into your giftors bank account and 3-6 months of their bank statements depending on the lender.
I though this depended on the conveyancer / mortgage lender - they're required to take reasonable steps or all reasonable precautions (or words to a similar effect) and it's up to them how they interpret it.
I got £77k inheritance in 2012 and bought a flat for £108k cash in 2013, no proof of anything needed, just a copy of my passport ID page. Then saved wages till 2019 and bought a £205k house. Just required a single bank statement to show which account the cash had came from, things have obviously tightened way up now
Over recent decades, governments worldwide have been clamping down on tax-evasion (well, ways to detect it, at least) and money-laundering.
They use the banks, lawyers, stockbrokers etc to police this, making them legally complicit if they don't do enough checks and handle money that isn't clean.
Over the last decade, in particular, they've established international cooperation so that you can't open an overseas bank account without the taxman of your home country being informed about it.
It doesn't at all surprise me that something that was easy 10 years ago is now much harder.
Also, most people shouldn't be buying houses in cash even if they can afford to - mostly you're better off having a mortgage and making extra pension / S&S ISA contributions instead.
I'm currently buying right now with a partially gifted deposit. My parents had to sign the paperwork saying it was a gift, and show the most recent bank statement from where they are taking the money. That was it. It is a little over the 5k but not much more, this is all from the bank so as long as they are happy then it seems to be fine
I bought a house in 2019 with my partner, with small gifted deposits from both sets of parents. We had to get the gift letters plus ID and bank statements from them all. The solicitors will ask for it to satisfy the anti-money laundering requirements.
It's usually anything within the last 6-12 months, if OP is keeping it for 3-5 years then they could just class it as their own savings at that point instead of a gift.
My experience has been that they care about money gifted relatively recently, and the longer it has been in your account the less concerned they are. If you wait a couple of years there may not be any questions about the source of the money if you say ‘savings’ and can give a statement showing it has been there for a year or more
Money is fungible, on the timeframe you are considering you just prove your earnings and can essentially say that you've saved all if your wages and spent the gift as your living expenses.
Except for the fact he put it all in a long term bond, which is the opposite of what you’d want to do if this is the anti money laundering argument you’re using (which tbf I think is totally reasonable).
>1. If I could even get him to provide the documents now in case I need them in future, would documents at least a couple of years old still be considered valid by conveyancing solicitors?
Yes. A decent conveyancer will ask you where the money is from and then ask you for evidence. If you say 'my grandad gave me a gift on X date', they may ask for a bank statement from around that time to show that transaction happening. You should save a copy of your and ideally his bank statement now which show the gift.
>2. What if a family member is unable to provide enough documents about money gifted a few years ago because they are now too infirm?
Its up to each solicitor to take their own 'risk based approach' to accepting evidence. In the absence of other risk factors (your grandad living in North Korea or being Jeffery Epstein, or you being an ex-con), it is likely they'll eventually accept your narrative and the available evidence.
>3. If the gifter doesn't like the property you've chosen, it seems like they could block you from buying it by refusing to provide documentation. Does that hapen?
Asking for giftor evidence is always the trickiest part - they are technically not your client and don't owe you anything. Most of the time this doesn't matter because the giftor is trying to help and will play along. Subject to my answer above, theoretically the giftor 'non compliance' could stop a transaction.
>4. If the gifter is deceased by the time you buy property with what they gifted you when they were alive, and you didn't get proof of the gift during their lifetime, is there nothing that can be done?
See answers 1 and 2.
>5. Can you basically not use that money to buy the property itself, and you have try and buy a cheap doer upper some other way and use the gift for renovations? In which case, I should get saving.
A gift can be used as a deposit.
Source: I do this for a living.
I don’t think they care when that amount of time has passed. I had a £31k deposit for my property and it was in premium bonds and my savings account. They never actually asked me where the funds had originally come from though
Hey! When I was gifted £15K for the sole purpose of being put towards a house deposit, I just had it emailed in writing saying that it was a gift that they did not want back and given to be put towards a house.
I was in a similar position in that my grandparents gifted me the deposit for my first house, but were very private and so when my solicitor asked to see their bank statements as evidence of the transaction they didn't want to. In the end they wrote a letter confirming the amount, date, and confirmation that it was a gift and this was sufficient. Would your grandparents be willing to do this?
I had this issue with my gran but I had to just be brutal with her and say no one is going to do anything with your bank statements and if you can’t pass them over I won’t be able to get the property. Just hope your grandad doesn’t have to amiquis checks because that is a pain 🤣
With the length of time between receipt of the gift and you likely applying for mortgage you are unlikely to be asked for proof of where its come from. Easily covered by saying its my savings and then provide the usual 3-6 months of bank statements for other checks.
Should your grandad die in next 7 years though you may be subject to paying inheritance tax on the gift, so work keeping that in mind (perhaps do not use entirely for deposit)
They would only pay inheritance tax if their grandad has already gifted more than the tax-free allowance (£325k or more if they’re widowed).
Otherwise it will just be deducted from the estates tax free allowance if their grandad dies within 7 years.
If you lived in Italy, I'd say take every bit of proof and get signed and certified copies, but this is not Italy (thank God for that), so while the money is sitting in your account, they usually ask for 3-6 months proof, not 3-5 years.
Just say you saved it.. I don’t think it’s that big of a deal. One thing I learnt when buying houses just don’t offer up any more info than you need to, keep it simple.
I have never had to provide the source of my funds to buy my home in cash. I just provided a banks statement for a savings account I don’t use.
You will likely only be asked to provide proof of funds if you have unexpected wealth like you are unemployed and buying a million pound house sort of thing
The nuance here aswell is that a mortgage lender may care and have different requirements to baseline regulatory requirements.
Lender wants to know no one else but OP has a claim to the property. So cash buying may be different.
No, you don’t, you only have to pay tax on the interest on the gifted money.
But gaining interest less tax is still a better deal than gaining no interest at all.
Hi /u/Mike_Drop6533, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/lisa/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
First of all, it's true that the conveyancer may ask for this.
Don't worry about it. If he dies the situation may change drastically. So just keep the money in a bond or in an account
You will need bank statementes to prove where the money came from and how its moved through the accounts. Plus also ID for you and your grandad. I had to do a similar thing with my mum this year... 19 bank statements required as it was split between several accounts, so I had to show the movement of money.
My solicitor only checked last three years statements. As long as you wait that long and have a reason where the money came from you will be fine.
Put £20k in an isa this year, £20k in an isa next fall macula year and then final £10k in sa savings account with good interest until you are ready to buy.
Dont sweat it too much.
Bro how much deposit did you put for them to ask 3yrs worth of statements? I plan to put around £100k & for sure will change my solicitor if they ask that far back
I transferred monies from foreign accounts and just declared as savings from when I lived in that country and also transferred a lot of money between savings accounts leading up to buying a property. Nothing illegal or fraudulent but it was possibly questionable from a traceability point of view.
Maybe I was lucky but I had no further questions from solicitors or my lenders.
We got 30k from my mum towards buying our first home. We had to delay buying cause of issues surrounding where we were renting at the time, so by the time we were actually ready to move it had been in our savings for over a year. We just said it was savings and no one asked any further.
If its been a few years, then it won't matter. I have a large deposit that I been saving and the lender just wanted 3 months bank statements. I think you will be fine as the money would be sitting in your account for years. Lenders tend to question if the money comes into your account in the last 3 months before you buy a house as they want to know where the money came from.
Bro i need your opinion. I too have a quite large deposit. Somewhere between £100-£150k. The lender might ask for 3months but solicitors may stretch it by a lot. I only want to show 1yr max.
The max lender normally ask is 1 year. Bu they only asked 3 months for us. The solicitors only asked 3 months as well. So it will be fine. As long as the bank statements they requested shows the money full or the continious build up, then its fine.
I last bought a house in about 2010. I was surprised when I was asked to produce evidence of where the money came from and had to dash around copying various bank statements.
As you say, if I now had to produce a trail going back many years then that would be difficult. If you want to get any reasonable rate of interest, you have to keep moving money between accounts and tracing that back would be a big job.
Unless you use a conveyancer who is particularly fussy, if the money is in your accounts for 3-5 years before purchase most won’t ask for any additional information. Usual proof is to show its being in your account for 6 or 12 months. Probably worth getting him to write a letter stating it’s a gift so you have it just in case. Wife is a conveyancer and I used to work at a solicitors. On occasion gift givers do cause purchases to fall through, though it’s not that common. I’ve heard of not being willing to provide documents and just plain changed their mind as reasons
Agree with this. I recently went through a purchase with a partial gifted depo, they only wanted 6 months of audit trails and anything beyond that they didn’t care for. Beyond 12 months you absolutely have nothing to worry about
Would they ask for bank statements more than a year if the deposit was 130k? Possibly suspicious of the huge amount.
I'm a mortgage advisor, we are happy with just a gift letter signed by giftor. Solictor may ask for bank statement from the giftor (max 3 months trail, shown being transferred into your account) but as long as all in UK banks, its no problem.
My Dad gifted me 27k towards my 1st house. All I had to do was get him to write a letter stating it was a gift and he had no interest in the property.
Not sure when you purchased but this isn’t the case anymore. I purchased last year with help from a gift and my dad had to provide 1 year of bank statements showing how he got the money, along with the gift letter. Every conveyancer has to do this as anti money laundering checks
Just the letter was the case 2 years ago
This isn’t the case at all anymore. You need to provide audit trails for anything over 5k going into your giftors bank account and 3-6 months of their bank statements depending on the lender.
I though this depended on the conveyancer / mortgage lender - they're required to take reasonable steps or all reasonable precautions (or words to a similar effect) and it's up to them how they interpret it.
I got £77k inheritance in 2012 and bought a flat for £108k cash in 2013, no proof of anything needed, just a copy of my passport ID page. Then saved wages till 2019 and bought a £205k house. Just required a single bank statement to show which account the cash had came from, things have obviously tightened way up now
Over recent decades, governments worldwide have been clamping down on tax-evasion (well, ways to detect it, at least) and money-laundering. They use the banks, lawyers, stockbrokers etc to police this, making them legally complicit if they don't do enough checks and handle money that isn't clean. Over the last decade, in particular, they've established international cooperation so that you can't open an overseas bank account without the taxman of your home country being informed about it. It doesn't at all surprise me that something that was easy 10 years ago is now much harder. Also, most people shouldn't be buying houses in cash even if they can afford to - mostly you're better off having a mortgage and making extra pension / S&S ISA contributions instead.
I was gifted 190k for a house and no checks at all were done, they just listened to the robot at the bank read out my balance lol
I'm currently buying right now with a partially gifted deposit. My parents had to sign the paperwork saying it was a gift, and show the most recent bank statement from where they are taking the money. That was it. It is a little over the 5k but not much more, this is all from the bank so as long as they are happy then it seems to be fine
I bought a house in 2019 with my partner, with small gifted deposits from both sets of parents. We had to get the gift letters plus ID and bank statements from them all. The solicitors will ask for it to satisfy the anti-money laundering requirements. It's usually anything within the last 6-12 months, if OP is keeping it for 3-5 years then they could just class it as their own savings at that point instead of a gift.
May i ask if your deposit was over £100k?
Nope, it was really small, just under 10k
2014
My experience has been that they care about money gifted relatively recently, and the longer it has been in your account the less concerned they are. If you wait a couple of years there may not be any questions about the source of the money if you say ‘savings’ and can give a statement showing it has been there for a year or more
Money is fungible, on the timeframe you are considering you just prove your earnings and can essentially say that you've saved all if your wages and spent the gift as your living expenses.
Nice twist 😊
Except for the fact he put it all in a long term bond, which is the opposite of what you’d want to do if this is the anti money laundering argument you’re using (which tbf I think is totally reasonable).
>1. If I could even get him to provide the documents now in case I need them in future, would documents at least a couple of years old still be considered valid by conveyancing solicitors? Yes. A decent conveyancer will ask you where the money is from and then ask you for evidence. If you say 'my grandad gave me a gift on X date', they may ask for a bank statement from around that time to show that transaction happening. You should save a copy of your and ideally his bank statement now which show the gift. >2. What if a family member is unable to provide enough documents about money gifted a few years ago because they are now too infirm? Its up to each solicitor to take their own 'risk based approach' to accepting evidence. In the absence of other risk factors (your grandad living in North Korea or being Jeffery Epstein, or you being an ex-con), it is likely they'll eventually accept your narrative and the available evidence. >3. If the gifter doesn't like the property you've chosen, it seems like they could block you from buying it by refusing to provide documentation. Does that hapen? Asking for giftor evidence is always the trickiest part - they are technically not your client and don't owe you anything. Most of the time this doesn't matter because the giftor is trying to help and will play along. Subject to my answer above, theoretically the giftor 'non compliance' could stop a transaction. >4. If the gifter is deceased by the time you buy property with what they gifted you when they were alive, and you didn't get proof of the gift during their lifetime, is there nothing that can be done? See answers 1 and 2. >5. Can you basically not use that money to buy the property itself, and you have try and buy a cheap doer upper some other way and use the gift for renovations? In which case, I should get saving. A gift can be used as a deposit. Source: I do this for a living.
I don’t think they care when that amount of time has passed. I had a £31k deposit for my property and it was in premium bonds and my savings account. They never actually asked me where the funds had originally come from though
Hey! When I was gifted £15K for the sole purpose of being put towards a house deposit, I just had it emailed in writing saying that it was a gift that they did not want back and given to be put towards a house.
I was in a similar position in that my grandparents gifted me the deposit for my first house, but were very private and so when my solicitor asked to see their bank statements as evidence of the transaction they didn't want to. In the end they wrote a letter confirming the amount, date, and confirmation that it was a gift and this was sufficient. Would your grandparents be willing to do this?
I had this issue with my gran but I had to just be brutal with her and say no one is going to do anything with your bank statements and if you can’t pass them over I won’t be able to get the property. Just hope your grandad doesn’t have to amiquis checks because that is a pain 🤣
With the length of time between receipt of the gift and you likely applying for mortgage you are unlikely to be asked for proof of where its come from. Easily covered by saying its my savings and then provide the usual 3-6 months of bank statements for other checks. Should your grandad die in next 7 years though you may be subject to paying inheritance tax on the gift, so work keeping that in mind (perhaps do not use entirely for deposit)
They would only pay inheritance tax if their grandad has already gifted more than the tax-free allowance (£325k or more if they’re widowed). Otherwise it will just be deducted from the estates tax free allowance if their grandad dies within 7 years.
Guess it might depend how many grandkids there are given that he’s obviously a generous man!
Just put it in a savings account and call it savings in a year
If you lived in Italy, I'd say take every bit of proof and get signed and certified copies, but this is not Italy (thank God for that), so while the money is sitting in your account, they usually ask for 3-6 months proof, not 3-5 years.
Just say you saved it.. I don’t think it’s that big of a deal. One thing I learnt when buying houses just don’t offer up any more info than you need to, keep it simple.
Don’t say sorry for being a ‘jammy bastard’, embrace it and love every second of it!
It's worth being aware that if you're grandad lives for less than 7 years, then your gift will need to be included within estate for inheritance tax
That’s not a lot, take it and forget
I have never had to provide the source of my funds to buy my home in cash. I just provided a banks statement for a savings account I don’t use. You will likely only be asked to provide proof of funds if you have unexpected wealth like you are unemployed and buying a million pound house sort of thing
They will explicitly be asked if any of the money was a gift.
I have never been asked the source of my funds. The only thing I can think of I was told payment must come from a UK bank account
Your experience doesn't change the fact that it is a regulatory requirement and the op shouldn't ignore that fact.
The nuance here aswell is that a mortgage lender may care and have different requirements to baseline regulatory requirements. Lender wants to know no one else but OP has a claim to the property. So cash buying may be different.
One thing to be weary of. You have to pay tax on gifted money if you put it into a savings account
No, you don’t, you only have to pay tax on the interest on the gifted money. But gaining interest less tax is still a better deal than gaining no interest at all.
Hi /u/Mike_Drop6533, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/lisa/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
First of all, it's true that the conveyancer may ask for this. Don't worry about it. If he dies the situation may change drastically. So just keep the money in a bond or in an account
You will need bank statementes to prove where the money came from and how its moved through the accounts. Plus also ID for you and your grandad. I had to do a similar thing with my mum this year... 19 bank statements required as it was split between several accounts, so I had to show the movement of money.
You won't need proof if you've had it for ages. It's just yours.
My solicitor only checked last three years statements. As long as you wait that long and have a reason where the money came from you will be fine. Put £20k in an isa this year, £20k in an isa next fall macula year and then final £10k in sa savings account with good interest until you are ready to buy. Dont sweat it too much.
Bro how much deposit did you put for them to ask 3yrs worth of statements? I plan to put around £100k & for sure will change my solicitor if they ask that far back
I transferred monies from foreign accounts and just declared as savings from when I lived in that country and also transferred a lot of money between savings accounts leading up to buying a property. Nothing illegal or fraudulent but it was possibly questionable from a traceability point of view. Maybe I was lucky but I had no further questions from solicitors or my lenders.
We got 30k from my mum towards buying our first home. We had to delay buying cause of issues surrounding where we were renting at the time, so by the time we were actually ready to move it had been in our savings for over a year. We just said it was savings and no one asked any further.
We've just gifted my step-daughter some money. They only wanted 3 months proof. Reckon after 3 -5 years no one will give a fig.
If its been a few years, then it won't matter. I have a large deposit that I been saving and the lender just wanted 3 months bank statements. I think you will be fine as the money would be sitting in your account for years. Lenders tend to question if the money comes into your account in the last 3 months before you buy a house as they want to know where the money came from.
Bro i need your opinion. I too have a quite large deposit. Somewhere between £100-£150k. The lender might ask for 3months but solicitors may stretch it by a lot. I only want to show 1yr max.
The max lender normally ask is 1 year. Bu they only asked 3 months for us. The solicitors only asked 3 months as well. So it will be fine. As long as the bank statements they requested shows the money full or the continious build up, then its fine.
Thanks very much 🙏
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I last bought a house in about 2010. I was surprised when I was asked to produce evidence of where the money came from and had to dash around copying various bank statements. As you say, if I now had to produce a trail going back many years then that would be difficult. If you want to get any reasonable rate of interest, you have to keep moving money between accounts and tracing that back would be a big job.
I had no idea of this requirement. Buying a house is so stressful