Property purchase - proof of funds

[Sunnypad]

hi all
I'm aware that different solicitors will work differently

I am hoping to buy a property in cash and wondered what the proof of funds investigation is like.

I do have old bank statements but the money is a mix of earnings and money gifted from my parents. I am hoping they have their own ways of checking rather than me having to go through lots of statements, some of which will be online, some from accounts that were closed and then transferred elsewhere.

I had been thinking they only needed to check me out for money laundering but do they need to check my parents as well? Dad is dead so they will have to do those checks online but I don't want my mum put through a lot of in-person hassle.

Additionally, some people have said solicitors do some checks before agreeing to take you on as a client. I have had a solicitor agree to this, so does that mean they have already run KYC checks?

Many thanks.

[Mike88]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

[Sunnypad]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

that's no problem, I was prepared for that.

I think the source of funds is the issue. My parents have given me money over the years and I didn't want my mum to get involved in the legal process, but from what I can see, they would involve her.

If you are not familiar with the backstory, my mum gets anxious just taking cash out, so to have the solicitor do AML checks on her isn't a good idea.

if they just take the information and do all the background checks themselves, that's fine. But if she is expected to submit bank statements etc she will explode with stress.

I will have to rethink if that's the case.

[Lootman]

In my experience they are mostly interested to see that you have had these funds for a reasonable period of time, i.e. a few months. As long as you have statements showing that the monies intended have been yours in a stable manner, then that should be sufficient. The authorities do not seem to be anal retentive about it, at least unless they have some other reason to be suspicious.

One thing to be careful of is to be sure that when it comes time to fund the completion, that you actually use the funds you identified to them earlier. If you suddenly fund the purchase from funds that you did not identify earlier then that may raise a flag. I nearly became a cropper the last time I bought a property because I used a different source of funds than the one I had previously stated, and I had to jump through some hoops to complete the transaction.

[AsleepInYorkshire]

hi all
I'm aware that different solicitors will work differently

I am hoping to buy a property in cash and wondered what the proof of funds investigation is like.

I do have old bank statements but the money is a mix of earnings and money gifted from my parents. I am hoping they have their own ways of checking rather than me having to go through lots of statements, some of which will be online, some from accounts that were closed and then transferred elsewhere.

I had been thinking they only needed to check me out for money laundering but do they need to check my parents as well? Dad is dead so they will have to do those checks online but I don't want my mum put through a lot of in-person hassle.

Additionally, some people have said solicitors do some checks before agreeing to take you on as a client. I have had a solicitor agree to this, so does that mean they have already run KYC checks?

Many thanks.

I'm not entirely sure I can offer any help on this subject. And without wishing to sound patronising or answer the question that wasn't asked may I offer a small thought please. You're a cash buyer. That's as rare as flying pigs I'm sure you will have to justify something but please don't lose sight of how valuable you can be to a prospective seller. Hopefully you'll find someone who can offer a good reply

Take care

AiY

[Sunnypad]

In my experience they are mostly interested to see that you have had these funds for a reasonable period of time, i.e. a few months. As long as you have statements showing that the monies intended have been yours in a stable manner, then that should be sufficient. The authorities do not seem to be anal retentive about it, at least unless they have some other reason to be suspicious.

One thing to be careful of is to be sure that when it comes time to fund the completion, that you actually use the funds you identified to them earlier. If you suddenly fund the purchase from funds that you did not identify earlier then that may raise a flag. I nearly became a cropper the last time I bought a property because I used a different source of funds than the one I had previously stated, and I had to jump through some hoops to complete the transaction.

Thanks
Most of it will have been around for at least six months, but some is about three months
I don't have enough funds to get them in a muddle

My concern is I don't want mum dragged into it. She won't be able to cope with that at all. She has had to do a (much mentioned on here) tax return for years so hopefully whatever checks they do can be done via HMRC.

AiY, yes, but the solicitors have to do what they have to do.

[Mike88]

With the additional information you have provided I now understand why you have asked the question.

Two years ago I gave my son the money to pay for the stamp duty on the house he was buying. When it came for the solicitor to check whether he had the mortgage and funds to buy the property he explained that he would be receiving money from his parents to fund the stamp duty.

His solicitor subsequently sent me a letter with legal agreement for me to sign and get witnessed to confirm that I was in fact giving him the money and also to confirm that the money was being taken from savings and that I would not require repayment. The solicitor's letter indicated such confirmation was necessary in order to comply with the Money Laundering Regulations.

However, if you are already in receipt of the funds and the gift from your parents does not show up on any statements you are required to provide, you
may be able to avoid getting your mother involved but others more in the know will be able to confirm this.

[Clitheroekid]

To be honest, it will largely depend on which solicitors you use. A few firms are extremely strict, others do the bare minimum (and a few don't bother at all - https://www.lawgazette.co.uk/news/solic ... 40.article)

It seems to help if you're a Russian / Nigerian / Ukrainian billionaire, but I assume you're not!

In my experience, unless you come across as a suspicious character for some reason most firms won't want to go into great detail. Every firm sees MLR checks as a PITA, and although they will ask you where the cash came from if you say you've acquired it over the years from earnings and gifts from your parents they're unlikely to ask for evidence to back up your story. I'd certainly be very surprised if they wanted anything in writing from your mother, and I can't see any firm wanting to actually speak to her.

In practical terms the best way of resolving it is to explain the situation when you first contact them. Assuming you'll be ringing a few different firms for a quote just tell them that you're a cash buyer but that you've acquired the cash over several years and don't have much proof of its origins. If they're keen to get the job they'll probably decide there and then to minimise the checks required. They may well say that you only need to produce a bank statement and that'll be enough. If they seem unreasonably picky just go to another solicitor - there are plenty to choose from!

[Sunnypad]

Thank you Clitheroe

I've had a lot of dealings with solicitors the last few years and though my usual one has said it's fine, I've encountered a lot of stuff that appears later, after they've got the business....

I have kept important bank statements but as I am a rate tart, an incentive tart opening up new current accounts etc, there would be a lot of paper to wade through if they really want to look. I have payslips and P60s.

Mike - Yes, I think it's different if you're actually contributing to the purchase. Mum isn't contributing that way, it's just if they check source of funds going into my main accounts, they will find mum's name and if they go back more than three years, they will find dad's name.

But the initial bank statements they get will just be in my name so hopefully that will be enough. I'm cashing in old ISAs etc to do this purchase so hopefully it will be okay...

Thanks everyone, much appreciated.

[UncleEbenezer]

One thing to be careful of is to be sure that when it comes time to fund the completion, that you actually use the funds you identified to them earlier. If you suddenly fund the purchase from funds that you did not identify earlier then that may raise a flag. I nearly became a cropper the last time I bought a property because I used a different source of funds than the one I had previously stated, and I had to jump through some hoops to complete the transaction.

Really?

I showed them my ISA as proof of funds for simplicity: it showed sufficient funds in one place. But I didn't touch it for the house purchase.

In showing the ISA, I did explain that I'd use other funds (my SIPP 25% lump sum, supplemented by cash savings and sale of non-ISA shares). But in any case, the funds reached my solicitor via my regular bank account, from where the source could've been anything available to me.

[stevensfo]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

What next? Tesco requires a bank statement before you're allowed in the Malt Whisky section?

Though it is a long time since I bought a house.


Steve

[dealtn]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

What next? Tesco requires a bank statement before you're allowed in the Malt Whisky section?

Though it is a long time since I bought a house.


Steve

Or sold one, presumably, when time wasters are more of an irritant.

[Lootman]

One thing to be careful of is to be sure that when it comes time to fund the completion, that you actually use the funds you identified to them earlier. If you suddenly fund the purchase from funds that you did not identify earlier then that may raise a flag. I nearly became a cropper the last time I bought a property because I used a different source of funds than the one I had previously stated, and I had to jump through some hoops to complete the transaction.

Really?

I showed them my ISA as proof of funds for simplicity: it showed sufficient funds in one place. But I didn't touch it for the house purchase.

In showing the ISA, I did explain that I'd use other funds (my SIPP 25% lump sum, supplemented by cash savings and sale of non-ISA shares). But in any case, the funds reached my solicitor via my regular bank account, from where the source could've been anything available to me.

In my case it was a little different because the original funds identified were mine, but then the money actually came from my wife. So it was clear to the solicitors that this was not the funds that had been designated. I would have thought that it didn't matter who pays if a couple are buying the property but, at least in this case, it was questioned.

[Redmires]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

Steve

Me too. And we're about to start looking for a house for our daughter for her to live in/us to have the rental income. I bet that takes even more snooping.

Still, at least all the checks stop the dodgy Russian, African & Middle East money from buying up all the property in the south east

[DrFfybes]

We bought our place for cash last year.

Their estate agent wanted to see proof of funds (we sent screenshots of online statements with the account numbers blanked) but the solicitors merely asked where they had come from and AFAIK didn't check up. Then again we had done a couple of sales via them in the previous 3 years.

Paul

[Redmires]

Mind you, having just read this, it seems more checks should be in order. For the seller as well as the buyer.

https://www.bbc.co.uk/news/uk-england-essex-59069662

[Dod101]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

What next? Tesco requires a bank statement before you're allowed in the Malt Whisky section?

Though it is a long time since I bought a house.


Steve

If you are a seller that is a helpful practice. I sold a substantial house some years back through Savills. They interviewed all of those who wanted a viewing to ensure that they had the funds to make a sensible offer. Saved us a lot of time showing nosey parker types around and when we did accept an offer, we had their required 10% deposit within 24 hours of acceptance.

Dod

[Lootman]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

What next? Tesco requires a bank statement before you're allowed in the Malt Whisky section?

Though it is a long time since I bought a house.

If you are a seller that is a helpful practice. I sold a substantial house some years back through Savills. They interviewed all of those who wanted a viewing to ensure that they had the funds to make a sensible offer. Saved us a lot of time showing nosey parker types around and when we did accept an offer, we had their required 10% deposit within 24 hours of acceptance.

Yes, in 2010 we sold a rambling period property in Dartmoor National Park. Over the first few weeks we had a couple of dozen viewings and it became obvious that they were just "looky loos" who fancied a nice day out in Dartmoor. No offers.

I had a word with the estate agent and told him that I wanted him to vet potential buyers. No viewings for a while, and then a couple came up from London for the weekend to view our house, spent 90 minutes looking and asking the right questions, and then we got an all-cash offer which was accepted.

I think part of the problem is that sellers have agents but buyers don't, so there is a lot of indiscriminate and speculative viewings that make no progress. For every serious buyer there are a bunch of people just being nosey.

[stevensfo]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

What next? Tesco requires a bank statement before you're allowed in the Malt Whisky section?

Though it is a long time since I bought a house.


Steve

If you are a seller that is a helpful practice. I sold a substantial house some years back through Savills. They interviewed all of those who wanted a viewing to ensure that they had the funds to make a sensible offer. Saved us a lot of time showing nosey parker types around and when we did accept an offer, we had their required 10% deposit within 24 hours of acceptance.

Dod

Oh well, times have changed. We've never had a problem selling but we were both working and just left the Estate agent to do his job. We also had the advantage of not being in a 'chain' and not being in a frantic hurry. However, I do now remember my grandmother trying to sell her house back in the mid 1970s after my grandfather died, and saying that half the viewers were the local village nosy-parkers. Apparently they were well known for viewing every house they could. So I can see the advantage of weeding them out.

Just that the thought of an Estate agent demanding private statements does rankle with me somewhat.

I'd be tempted to copy those scenes from movies where I just open an attache case, show the cash stashed neatly inside and shrug. "Satisfied?" Guess it would backfire today.

Steve

[mc2fool]

My estate agent required up to date bank and share statements to prove I had the money even to view a property.

Good God! Never heard of this before! Bloody cheek!

Steve

Me too. And we're about to start looking for a house for our daughter for her to live in/us to have the rental income. I bet that takes even more snooping.

"You don’t have to show proof of funds until you have made an offer on a property. However, some estate agents may ask to see it earlier. There’s nothing wrong with doing this, but if you don’t want to you don’t have to. But showing evidence you have the funds in place means you are a serious buyer."
https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/do-estate-agents-need-proof-of-funds/

Of course, if on wanting to view properties you tell the estate agent that you don’t have to show proof of funds just to view they may well respond with they don't have to show you any properties....