Understanding Source of Funds for Conveyancing purposes

Buying a property is an exciting milestone, which involves important legal and regulatory steps to protect everyone involved. One key requirement is providing evidence of the source of funds for your purchase. As your solicitor, we are here to guide you through this smoothly and ensure everything progresses without unnecessary delays.

What Does “Source of Funds” Mean?

This refers to the origin of the money you are using to buy a property; whether from savings, a gift, inheritance, or the sale of assets. UK anti-money laundering (AML) regulations require solicitors to verify that these funds are legitimate and not derived from criminal activity. We’re not doubting your integrity; it’s a legal obligation that helps maintain the transparency and integrity of the property market.

Common Sources of Funds and the Evidence Required

Different funding sources need tailored supporting documentation. Here are the most frequent ones we see:

Savings or Salary: Recent bank statements (typically 3–12 months) showing consistent deposits and a clear build-up of funds
Gifted Deposit: A formal signed gift letter from the donor, plus their bank statements demonstrating the source of the gifted amount
Inheritance: A solicitor’s letter confirming the inheritance, a copy of the will or grant of probate, and bank statements showing receipt of the funds
Sale of Property or Assets: The solicitor’s completion statement from the previous sale, or contract notes if selling shares or other investments
Bonuses or Dividends: An employer letter or dividend confirmation, supported by bank statements
Sale of a Vehicle: A bill of sale and evidence of the proceeds entering your account
Crypto assets: Detailed records from exchanges, wallet transaction histories, and proof of transfers into a UK bank account.

Providing clear, organised evidence helps us verify your funds quickly and efficiently.

Key Requirements and What to Expect

Under the Proceeds of Crime Act 2002, solicitors must carry out due diligence to confirm funds are clean. This usually involves reviewing 3 to 6 months of bank statements to follow the “money trail.”

What’s the difference between source of funds and source of wealth? Source of funds looks at the specific money for this transaction, while source of wealth examines the broader origins of your overall financial position. In most residential purchases, we focus primarily on source of funds.

Funds should normally come directly from your own bank account. If a third party is involved, it must be properly declared as a gift with appropriate documentation. Unexpected third-party payments can raise questions and cause delays.

Helpful Tips to Avoid Delays

The best way to avoid delays is to gather and share your supporting documents as early as possible. We are always happy to review drafts of gift letters or advise on the best format for other evidence.

At H&B, we handle these requirements professionally and sensitively every day. Our goal is to make your conveyancing experience as straightforward and stress-free as possible. If you have any questions, please do not hesitate to contact us.

“I have been very satisfied with work undertaken for me – possibly reflected by my son and partner, who each became a client too!”

Address

77 North Street
Ripon
North Yorkshire HG4 1DP

Email

mail@hb-law.co.uk

Phone

01765 602156

Fax

01765 690018