How to pass the source of funds verification when buying a house after ILR?

A buyer has committed £25,000 to a property purchase transaction, yet the bank statements on file show that just five months prior to completion, the account balance was only £500. A review of the documents reveals a lack of evidence explaining how these funds were accumulated. This is an enforcement case disclosed in a thematic report by the Solicitors Regulation Authority (SRA) on 5 November 2025. The regulatory conclusion focuses on inadequate checks and does not constitute a finding that the buyer's funds are illicit.

Below, we will walk through the document preparation process in accordance with the residential property buying and selling procedures in England and Wales.

When entrusting the funds, first clarify the breakdown of the sum.

Even if you hold ILR (UK permanent residency), you are still subject to source of funds checks when purchasing a property. When instructing a conveyancing solicitor, break down the purchase funds into categories such as mortgage, personal savings, and proceeds from property sales, clearly stating the amount, currency, and account for each portion. The Source of Funds statement must explain how the funds used for this transaction were obtained. An SRA thematic report highlights another easily overlooked detail: law firms may charge clients for due diligence fees, but these fees must be clearly set out in the terms of engagement. When requesting a quote, be sure to confirm whether these checks incur any additional fees.

My assessment is as follows: individuals whose funds have been routed through multiple accounts should first ensure all transfer records are complete before arranging payment to the law firm; making extra transfers just to tidy up the transaction history is simply not worth it.

Salary and proceeds from the sale of a house: the supporting materials for each have their own specific focus.

Evidence can be organized according to the SRA Q&A evidence categories. For salary savings, provide payslips, P60s, and other income documents, along with bank statements showing salary deposits and transfers into savings; for proceeds from a property sale, provide the completion statement, transfer of title, or other proof of sale, followed by records of the sale proceeds being received; for inheritance proceeds, provide the will, probate documents, or confirmation from the handling solicitor, corresponding to the beneficiary's receipt records. Each set of documents should be annotated with the "amount used for this property purchase," matching the relevant credit entries with the document reference numbers. If there is a discrepancy between the sale price and the actual amount received, the completion statement can be used to explain deductions such as mortgage repayments and transaction fees, facilitating the handler's verification of the amounts.

These are the starting points for compilation; the required scope remains to be confirmed by the handling attorney based on transaction risk.

After a few turns, just connect the path.

Once you have obtained the UK bank statements, you must also trace the transaction history of the funds prior to their entry into this account. The SRA Q&A explicitly states that the mere fact that funds originate from a UK bank is insufficient to establish their legitimate source. Proof of Funds demonstrates whether the funds are sufficient, whereas Source of Funds explains how the funds were acquired. If the funds have passed through overseas accounts, undergone currency exchange, and been deposited into a UK receiving account, I recommend providing the transfer-out statements, currency exchange receipts, and deposit records in chronological order, ensuring that the name, date, currency, and amount correspond item by item.

For transfers between your own accounts, records must also be maintained for both ends; any amount discrepancies arising from fees and exchange rates may be itemized and explained separately.

One page is missing from the old bank statements. How can I get a replacement?

When providing supplementary documents, ask your lawyer to specify exactly what is missing: is it proof of income, or upstream records for a specific transfer? If an old account has been closed, you can request historical bank statements from the original bank; if property sale documents are incomplete, contact the original handling agent to obtain supplementary transaction or settlement records. Whether alternative documents are acceptable should be confirmed with your current handling lawyer. For Chinese documents, it is also advisable to confirm the translation requirements in advance: the SRA Q&A states that foreign-language documents may require translation and notarization, meaning it is not mandatory to translate and notarize every single bank statement. Provide complete and clear documents, along with an explanatory page to facilitate cross-referencing the materials.

The explanatory page can be used to explain gaps, but it cannot substitute for missing supporting documents; if materials are temporarily unavailable, promptly explain the reasons and provide an update on the progress of retrieving replacements.

Before the exchange of contracts, confirm the verification progress.

Prior to the exchange of contracts, it is advisable to confirm in writing whether the funds verification has been completed, which documents are still outstanding, and from which account the funds will be paid. Section 18 of the UK Government's "Home Buying Guide" warns that once contracts are exchanged, the transaction becomes legally binding, and withdrawing may result in the loss of the deposit and liability for compensation. If there is a change in the funder or the source of funds close to the payment date, your solicitor must be notified promptly; an SRA thematic report requires verifying whether the actual funds received match the previously submitted documentation, and any changes may necessitate supplementary checks.

This article is for informational purposes only. For specific matters, please consult a licensed attorney.

One of the verification issues listed in the SRA thematic report is: "Do the documents provided match the explanation given?"

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