Rising rents, property prices, household bills and the cost of living are all making it increasingly difficult for first-time buyers to save a full deposit on their own.
A 2025 report from Savills found that around 52 per cent of first-time buyers received a helping hand from the ‘bank of mum and dad’ or other family members to get on to the property ladder.
This financial assistance is usually given as a gifted deposit.
Buyers need to be clear about the requirements for this gift so that their purchase can be smooth sailing.
What is a gifted deposit?
A gifted property is the money given to a property buyer to help fund all or part of their deposit.
This is not to be confused with a loan, as the money is provided with no expectation of repayment.
The person giving the money also does not receive a legal interest in the property.
The average cost of a home for a first-time buyer in the UK is around £229,000 at the moment, according to Zoopla.
With house prices like these, buyers are putting down deposits of roughly £30,000 or more and family support is becoming increasingly common in funding this.
What are the requirements for a gifted deposit?
The most important requirement is that the deposit must genuinely be a gift.
Mortgage lenders need reassurance that the buyer will not have additional debts to repay alongside their mortgage.
If there is any expectation that the money will be paid back in the future, the lender may treat the arrangement as a loan instead.
This could affect your affordability checks and potentially impact the mortgage application.
Most lenders will only accept gifted deposits from close relatives, although some may allow gifts from partners or extended family members, depending on their criteria.
The donor also cannot usually have ownership rights over the property unless this has been formally agreed with the lender.
Lender requirements can vary and buyers should always disclose gifted deposits at the earliest opportunity.
How do you prove a gifted deposit is legitimate?
Mortgage lenders and solicitors are legally required to carry out checks on gifted deposits to comply with anti-money laundering regulations.
The donor will usually need to provide identification documents, proof of address and bank statements showing where the funds came from.
Lenders will also usually ask for a gifted deposit letter confirming that the money is an unconditional gift and does not need to be repaid.
The letters usually confirm:
Get advice on gifted deposits
With so many buyers relying on gifted deposits, proper legal guidance is key to understanding the implications they have for everyone involved.
If you’re looking to buy a property with the help of family, or you are the family member planning to help a buyer get onto the property ladder, our residential property team can guide you through the correct procedures and ensure everything is properly protected.
Get in touch to speak to our residential property team.
