ID and Source of Funds Checks: What You Need to Know Before You Move

Understanding what is required, and preparing your documents early, can help avoid unnecessary delays and keep your move progressing smoothly.

When buying or selling a property, professional advisers must verify:

• •That you are who you say you are.
• •That you are legally entitled to sell or purchase the property.
• •That any money being used for the transaction comes from a legitimate and identifiable source.

These checks are legal and regulatory requirements designed to prevent fraud, money laundering and financial crime. Although multiple parties may ask for similar information, each organisation is responsible for carrying out and retaining its own checks and cannot simply rely on those completed by someone else.

Getting these documents together at the start of the transaction can save valuable time later.

Proof of Identity

Typically, you will need:

• •A valid passport; or
• •A photocard driving licence.

Proof of Address

This is usually required in addition to your photo ID and may include:

• •A recent utility bill.
• •A bank or building society statement.
• •A council tax statement.
• •A driving licence showing your current address.

Most documents should be dated within the last three months.

As well as proving your identity, you will usually need to demonstrate where the money for your purchase has come from.

This is known as your Source of Funds. Your conveyancer must be able to follow the journey of the money being used and understand how it was accumulated.

The exact documents required will depend on your circumstances.

If the Funds Come From Employment Income

You may be asked for:

• •Recent payslips.
• •A P60.
• •Bank statements showing salary payments.

If You Are Self-Employed

You may need to provide:

• •Tax returns.
• •Accounts.
• •Evidence of drawings or business income.
• •Supporting bank statements.

If the Funds Come From Savings

You may be asked to provide bank statements showing the gradual accumulation of funds over time.

If the Funds Come From the Sale of Another Property

You should be prepared to provide:

• •Evidence of the previous sale.
• •Completion statements from your previous conveyancer.
• •Bank statements showing receipt of the sale proceeds.

If the Funds Come From an Inheritance

You may need:

• •Correspondence from the executors or solicitors handling the estate.
• •Evidence of the inheritance received.
• •Bank statements showing the money entering your account.

If the Funds Are a Gift

Gifted deposits are very common, particularly where parents or family members are helping buyers onto the property ladder.

In these circumstances, the person providing the gift will usually need to:

• •Confirm the amount being gifted.
• •Provide identification and address documentation.
• •Demonstrate where their funds originated.
• •Sign a declaration confirming the gift is non-repayable and that they will have no legal interest in the property.

One of the most common causes of avoidable delay in a property transaction is waiting for identification or source of funds documentation to be provided.

The earlier these requirements are dealt with, the sooner your conveyancer can progress the legal work and avoid unnecessary hold-ups later in the transaction.

A little preparation at the outset can make a significant difference to the speed and smoothness of your move.

At Ashlings Legal, we are committed to maintaining the highest professional standards for both our regulators and our clients. These checks are a vital part of protecting the integrity of the conveyancing process, and we take our responsibilities seriously while aiming to make the process as straightforward as possible for you.

If you’re unsure what documents you need, what evidence will be accepted, or how to demonstrate your source of funds, our team is here to help.

Give Ashlings Legal a call and we will happily talk you through the requirements, explain the acceptable options available to you, and help ensure everything is fully compliant from the outset.

By getting things right early, we can help minimise delays and keep your transaction, and the wider chain, moving efficiently towards completion.