When you become involved in buying or selling a property many of the people you engage with, be it estate agents, property lawyers or mortgage brokers all seem to want the same sort of information from you before they’ll actually take you on as a client. Why is that?
What they’re doing is establishing that you are who you say you are and if you’re selling, that the property is legally yours to sell and that if you are buying, that the money is coming from a legitimate source.
For many, it feels like a real rigmarole, but what you need to remember is that while you know you are who you say you are, your professional adviser doesn’t. And what’s more, they are under strict legal obligations to carry out these checks.
Providing the same information
Added to the rigmarole is the fact that you have to provide the same information time and time again, each time you contract with a different party. This leaves many asking why all the advisers can’t just talk to one another?!
Trust me, whether it’s an estate agent, a property lawyer or your bank, they’re not purposely trying to annoy you at what is an already stressful time.
The reality is that they are each regulated separately and under English law are liable if something goes wrong. Therefore, they must take responsibility for their own checks, without relying on someone else’s. The legal guidance on this is very clear.
In 2014, a company called Dreamvar thought it was purchasing a property from a seller, but unbeknown to Dreamvar, the seller was a fraudster who had managed to obtain both the driving and TV licence of the true owner and get them certified by a solicitor. It was only after the buyers had transferred the money for the property that they discovered they had been defrauded and the money was gone.
Unfortunately, this case is not unique.
Criminals see property transactions as a great way of ‘cleansing’ the proceeds of their crimes. Buying a property enables criminals to launder large amounts of money in a single transaction.
Prove where your deposit comes from
So alongside being able to prove you are who you say you, this is why you also have to demonstrate where the funds for your purchase are coming from.
Your source of funds could come from the sale of another property, savings, an inheritance or a financial gift from family or friends. Yet, whatever the source, you will have to prove where it came from.
For example, if part of your house deposit is a gift, the person gifting you the money will have to demonstrate how they came by the funds. So, in today’s world where the ‘Bank of Mum and Dad’ is often a big contributor in house purchases, parents will have to confirm the amount of the gift and how these funds were obtained.
Yet, as onerous as all this sounds, a bit of forward-planning goes a long way in a property transaction. Being prepared increases your chances of a seamless, quick transaction. So, with that in mind, it’s worth being aware of these checks in advance and getting the documentation together that you need at the outset.
You will need to show:
- A proof of identity document, such as a passport or driving licence. A full list of official identification documents is available on the government’s website.
- Proof of your current address, such as a driving licence, bank statement, or utility bill (not more than three months’ old). A full list of proof of address documents is available on the government’s website.
- Proof of where your funding has come from, this might include your last three months’ payslips; a P60 from your employer; tax return and other documents if you are self-employed. More information on the documents you need are available on the Money Advice Service website.
If some, or all, of your funding is coming from inheritance, you will need evidence from the executors of the estate. If you have money coming from a family member, you will need a letter from them confirming that the money provided is a gifted deposit and that they have no rights over the property.
Remember, checking this information is a legal requirement to help safeguard your transaction, and failing to provide it in a timely manner will only slow down the transaction.