Residential property · Gifted deposits
Gifted deposits: the declaration, evidence and checks your solicitor needs
Yes, you can use money given to you by family, or sometimes a friend, towards your deposit. It has to be a genuine gift, not a loan, and we have to check where it came from. Expect us to ask the person giving it for identity documents, bank statements showing the money building up, and a signed declaration that it's a gift with no strings attached. We must also tell your mortgage lender, and some lenders accept gifts only from close family. Sort this out early, because a gift that isn't ready is a common cause of delay.
Written by Rebekah Brake Manning, Licensed Conveyancer (CLC) · Last reviewed
Why we need to check a gift
Two sets of rules apply.
Money laundering rules. The Money Laundering Regulations 2017 require us to understand where the money for your purchase comes from. A gift is part of your funds, so we check the person giving it (the donor) and the source of their money as carefully as we check you.
Your lender's rules. If you're buying with a mortgage, we usually act for the lender too. The lender's instructions require us to report if any of the purchase price isn't coming from your own funds. Many lenders then want details of the donor, a signed gift declaration, or their own form, before they will release the mortgage money.
Gift or loan?
A gift means the donor expects nothing back: no repayment, no interest and no share of the property. If the money has to be repaid, or the donor expects a share of the home, it's not a gift. That matters for three reasons.
Your lender. A lender assesses what you can afford on the basis that you don't owe the deposit to anyone. Telling a lender that a loan is a gift can be mortgage fraud.
The donor's position. If the donor wants their money protected, for example a share of the sale price later, that needs a different arrangement, usually a declaration of trust or a loan agreement, and the lender's consent.
Your relationship. If you're buying with a partner and only one of you is receiving a gift, think about how that contribution is recorded. A declaration of trust can set out who gets what if you sell or separate. See joint tenants or tenants in common.
What we will ask the donor for
- Photo ID and proof of address, checked electronically in the same way as yours.
- Bank statements for the account the money is coming from. They must show how the donor built up the money, usually over several months, not just the balance.
- An explanation of any large sums, such as savings, a pension lump sum, an inheritance, or the sale of a property or investments, with evidence.
- A signed gift declaration (see below).
- If the donor will live in the property: a signed consent confirming their occupation will not override the lender's mortgage. Lenders generally require this from anyone aged 17 or over who will live there and isn't a borrower.
The money should come to us directly from the donor's own bank account, by bank transfer. If it passes through another account first, including yours, we have to carry out source of funds and source of wealth checks on every account it came through, which takes longer. We don't accept cash.
What the gift declaration covers
We use our own gift declaration, and we'll send it to the donor to sign. Your lender will usually have its own form for the mortgage application, which you deal with through your broker or lender. Our declaration confirms:
- the donor's name, address and relationship to you
- the amount, and the property it is for
- that it is a gift, not a loan, and does not have to be repaid
- that the donor will not take any share in, or interest in, the property
- that the money is the donor's own, and where it came from
- that the donor understands the lender will rely on the declaration
Please don't copy a template from the internet and send it in. We need our own declaration, signed by the donor, and your lender may need its own form as well.
Gifts from abroad
Money from outside the UK can be used, but it takes longer. We need the same evidence of identity and source of funds, sometimes with documents in another language. International transfers can be slow, and some lenders don't accept gifts from donors outside the UK. Tell us at the start if any of your money is coming from abroad.
Tax points
These are points to discuss with an accountant or tax adviser, not tax advice.
Inheritance tax. A gift of money is usually free of inheritance tax if the donor lives for 7 years after making it. Each person can also give away £3,000 a year without it counting towards their estate, and an unused allowance can be carried forward one tax year. If the donor dies within 7 years, the gift may count towards their estate. The donor should keep a record of the gift, and take advice if the amount is large.
Stamp Duty Land Tax (England). A donor who isn't buying the property and isn't named on the title is not a buyer, so their gift doesn't, on its own, affect your first-time buyer relief. Land Transaction Tax in Wales has no first-time buyer relief.
Timing
Gifts slow things down when the evidence arrives late. The money needs to be with us before exchange of contracts, because that's when the deposit is paid, and the donor's documents are needed well before that. Your lender may also need to approve the gift before it releases the mortgage money. To avoid the gift holding things up:
- tell your broker and us about the gift at the start
- ask the donor to gather their statements now
- don't move the money between accounts before it comes to us
Gifted deposit checklist
For you
- Tell your mortgage broker or lender that part of your deposit is a gift, and check they accept it from this donor.
- Tell us the donor's name, relationship to you and the amount.
- If you're buying with someone else, discuss how the gift should be recorded between you.
For the donor
- Photo ID and proof of address.
- Bank statements showing how the money was built up, not just the balance.
- Evidence for any large sums: savings, inheritance, a sale or a pension lump sum.
- Sign our gift declaration, and your lender's form if it has one.
- If they will live in the property: sign an occupier's consent.
- Send the money by bank transfer directly from their own account to ours, when we ask and not before. We don't accept cash.
Our fee
Our fee for dealing with a gifted deposit is £95 + VAT for each donor. The ID and anti-money-laundering check, £35 + VAT per person, applies to each donor as well as to you. Our conveyancing fees list every fee that can apply.
Sources
- UK Finance Mortgage Lenders' Handbook (England and Wales): paragraph 5.13.1, reporting when the borrower is not providing the balance of the price from their own funds.
- GOV.UK: Inheritance Tax, gifts: the 7 year rule and the £3,000 annual exemption.
- Welsh Revenue Authority: Land Transaction Tax overview: no first-time buyers' relief in Wales.
This page is general information for purchases in England and Wales, not advice on your circumstances. Last checked .
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