Gifted Deposit

Over the past few years, gifted deposits have become more popular with parents helping their children to get onto the property ladder.

If you are making use of a gifted deposit, it is important to note that the deposit may have to be repaid under the following circumstances:

The death of the person making the gift within seven years of the gift if their estate is liable for inheritance tax; or
The person making the gift becomes bankrupt.

The following steps will need to be taken when a purchase involves a gifted deposit:

Inform your Solicitor

In order to ensure there are no delays. Please advise us at the outset if you intend to rely upon a gifted deposit. Even if this represents a small part of the deposit, we need to know as soon as possible.

Confirm the gift in writing

We require a letter from the person gifting the deposit confirming that they are providing a gifted deposit and they have no rights over the property. Don’t worry about the wording of this letter, we will provide you with a letter for them to sign.

We have to prove that the person gifting the deposit has no financial interest in the property and the money is a gift and not a loan. Some mortgage lenders may refuse to lend to you on the basis that there is potential for those gifting the deposit to say that it was in fact a loan and not a gift. You MUST check that your mortgage lender is happy for you to receive a gifted deposit before you proceed any further.

Identification

We will require identification from the person making the gift. Where possible, we will require the person gifting the deposit to attend at our offices with their ID and proof of address or arrange for certified copies to be sent to us. The following forms of ID and proof of address are acceptable:

Photographic ID Such as a driving licence, passport
Bank Statement or Utility Bill dated within the last 3 months

Confirm Source of Funds

In the same way with any funds received directly from you, we are required to obtain proof of the source of funds forming the gift. We refer you to our Source of Funds factsheet for further information.

If you have any further questions regarding your deposit, please do not hesitate to contact us.