Friends who are familiar with real estate investment in the UK know that the process of buying a house in the UK is relatively cumbersome and the entire process is relatively strict.
Among them, the "proof of source of funds to purchase a house" is a tricky one for many buyers.How to prove that the source of funds you used to buy a house in the UK is legal?
There are usually two types of buyers when buying property in the UK:
(1) Those who buy property in their own name Buyer
(2) Buyer who buys a house in the name of a company
First, who do you need to provide proof of source of funds?
To explain this problem, we should first understand the British anti-money laundering system Anti-Money Laundering (AML), also known as the anti-money laundering law.Over the years, monitoring and preventing "dirty money" in the financial system has been a key task for the British and even European governments.
In the UK, all businesses, financial institutions, individuals and their advisers are subject to the UK’s strict anti-money laundering (AML) regulations.In the revised Money Laundering Regulations 2017 (as amended), the British government stipulates and requires that lawyers, accountants, banks, real estate agents, etc. who handle real estate transactions are obliged to verify the legality of home buyers. identity to prevent criminals from laundering money through large real estate transactions.
Therefore, you will need to provide relevant proof of source of funds in the following steps:
( 1) When appointing a real estate lawyer, the home buyer needs to provide the lawyer with evidence of the relevant source of funds.
(2) When a home buyer applies for a loan from a bank, he or she needs to prove to the bank the source of funds for the down payment.
(3) Even some housing agencies have begun to require home buyers to provide proof of funds after intending to purchase a property. The review of proof of source of funds is part of the anti-money laundering review. .According to the UK’s anti-money laundering laws, no company or institution may provide any convenience for money laundering.Any individual or company that violates the provisions of this anti-money laundering law may face criminal prosecution.
Depending on the different circumstances of each investor, lawyers will require home buyers to produce relevant documents to prove it.
What are the ways to prove funds?
Investors who buy houses in the UK come from all over the world, and each buyer has his or her own different financial situation.
Personal deposit
This is the most commonly asked situation.Some investors' investment funds are their long-term personal savings.This situation is actually very common. You need to provide your bank statement to the lawyer to prove that your statement balance has sufficient funds to cover the funds you need to pay in the UK.
At the same time, you need to explain the source of these funds, such as how the deposits were accumulated, what the depositor does, what company he works for (or is self-employed), how many years of service, annual salary, and dividends are Etc., how many years have the savings been accumulated, etc.It takes a lot of energy and time to get all these certificates, so home buyers must prepare in advance.
Many customers have reported that it is difficult to provide proof of the source of funds for personal deposits because they are savings of themselves or their families over a long period of time.There are many funds that neither come from wages nor can be directly proved.
Especially for buyers from self-employed families, the company is run by their own family. Because the company needs to be run, they usually do not pay themselves high wages.It is very difficult to explain the proof of funds in terms of salary or dividends.Although this situation is real, few lawyers are willing to accept it because of insufficient evidence.
There is another question that is often asked: "I have 3 deposits of money/funds in a foreign account." If I am above ��, do I no longer need proof of funds?"As the UK's capital regulations become more and more stringent, whether your funds have been deposited in a British bank for 3 months or 3 years, your lawyer and bank have the right to ask you to explain the source of your deposits.
Investment income
A lot International house buyers are experienced investors. They not only invest in real estate but also in other financial products. So can other investment income be used as proof of funds to buy a house in the UK?
Of course investors can. Use rental income from other properties, stock dividends, redemption of financial products, etc. as proof of funds. In this case, you need to provide leases, stock dividend certificates, financial management certificates, etc. at the request of the lawyer.
At the same time, there are many. It is also common for investors to buy properties in the UK by selling their previous properties. In this case, the buyer will need to provide a series of proof of house sale.
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Gift
Some young home buyers may need their parents to pay a part or The entire house payment. Gifting is also a very common way to buy a house.
In this case, you need to provide the donor’s information and relevant documents as required by your lawyer, for example:
– The relationship between the donor and the recipient;
– Proof of identity of the donor (passport or ID card);
– Proof of address of the donor (within the last three months, the property owner’s name on the property) Electrical bill or bank statement, etc.);
– the source of the gift funds;
– the gift letter between the donor and the recipient;
In other words, The method of gifting is completely feasible and common. The key lies in how to explain the source of the donor’s funds.
Let’s talk about another frequently asked question: “Borrowing money to come to the UK. Is it okay to buy a house?”
Of course it is possible. Money borrowed in a legal way can be used to purchase property in the UK. Just like a gift, you need to provide the borrower’s personal information and proof of the borrower’s source of funds. Therefore, an IOU/IOU alone cannot prove the legitimacy of the funds. The key is to explain how the borrower's funds came from.
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What documents are required to prove funds?
The above-mentioned methods of proving funds require the buyer to provide original documents or certified copies or notarized documents. At the same time, purchase a house. The buyer needs to provide your client's passport or identity certificate and address proof. The address proof can be proved by the utility bill or bank statement in the name of the home buyer in the past three months. Many overseas buyers who do not live in the UK may have difficulty providing original documents to developers or lawyers. In this case, you need to provide certified copies or notarized copies to them upon request. #{62 }
In the process of proving funds when buying a house in the UK, your lawyer will usually ask you to fill in a proof of funds form, which requires you to fill in the form of proof of funds. In addition, the home buyer needs to fill in the form. Including basic personal information of the client (home buyer) such as: name, address, phone number, email, occupation, etc.; address of the property purchased, room number, price, date of exchange of contracts, etc.
