9th February 2026 | Shen Hussein | Residential Property, Source of Funds, Property Purchase

When purchasing residential property, buyers are required to provide evidence of the source of the funds being used. This is often one of the first issues raised at the outset of a transaction and can sometimes cause concern. However, these checks are a legal requirement and form a fundamental part of the conveyancing process.

Source of funds enquiries are not discretionary. They are designed to protect buyers, solicitors, lenders and the wider property market, and failure to address them properly can result in delay or, in some cases, an inability to proceed.

What Is Meant by “Source of Funds”?

“Source of funds” refers to the origin of the monies being used to purchase a property. This may include, for example:

  • Mortgage funds provided by a lender
  • A financial gift from a family member
  • An inheritance
  • Proceeds from the sale of another property or asset
  • Investment or dividend income
  • Personal savings accumulated over time

As residential property solicitors, we are required to obtain clear documentary evidence to verify the legitimacy of these funds. The nature of the evidence required will depend on each client’s circumstances but commonly includes bank statements, probate documentation, completion statements, investment records or formal gift letters.

Why Are Source of Funds Checks Required?

Anti-Money Laundering Compliance – Solicitors are subject to strict anti-money laundering legislation. Property transactions can be vulnerable to misuse by those seeking to conceal or legitimise the proceeds of crime. Carrying out robust source of funds checks is essential to comply with these regulations and to uphold the integrity of the residential property market.

Protecting Buyers and Their Investment – These checks are also in the buyer’s own interests. Where property is purchased using funds later linked to criminal activity, enforcement authorities may have powers to recover the asset, even where the buyer was unaware of any wrongdoing. Proper verification at the outset significantly reduces this risk.

Managing Transactional Risk and Delay – If satisfactory evidence of funds is not provided, a transaction may be delayed or prevented from progressing. Addressing source of funds requirements early, and providing clear documentation promptly, helps ensure that the conveyancing process runs smoothly.

What Evidence May Be Requested?

Depending on the circumstances of the transaction, buyers may be asked to provide:

  • A signed gift letter together with supporting bank statements from the donor
  • Investment or shareholding statements
  • A completion statement from the sale of a property
  • A grant of probate or confirmation from executors where funds derive from an inheritance
  • Recent bank statements demonstrating the build-up of savings

How You Can Assist the Process

To minimise disruption and delay, buyers are encouraged to:

  • Retain copies of all relevant paperwork
  • Avoid unnecessary transfers between accounts, which can complicate the audit trail
  • Provide requested documentation promptly
  • Be open and transparent about the origin of their funds

Final Thoughts

Source of funds checks are an essential and unavoidable part of any residential property transaction. While they can feel onerous, they are in place to ensure compliance with legal obligations, protect buyers, and safeguard the transaction as a whole.

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