New Restrictions Could Impact First-Time Buyers in Norwich
For many first-time buyers in Norwich, receiving money from a parent or grandparent has long been the helping hand needed to get onto the property ladder. But recent developments suggest this common practice is under scrutiny — and may soon become much harder.
Sean Peregrine, founder of The Good Estate Agent Norwich, has raised the alarm about new restrictions around gifted deposits. According to Sean, some banks are already refusing to accept gifted funds as part of a mortgage application. With further government pressure on the horizon, time may be running out for buyers who intend to rely on financial support from family.
Why Gifted Deposits Are So Common
A Necessary Step for Many First-Time Buyers
Rising house prices, increasing rent, and the cost-of-living crisis mean that many younger buyers are unable to save the full deposit required to buy a home. Family members have often stepped in to bridge the gap — providing financial gifts that can make the difference between buying and continuing to rent.
In Norwich, this practice is especially relevant, as local buyers face growing competition in popular postcodes such as NR1, NR3, and Eaton.
Typical uses of gifted deposits include:
- Increasing deposit size to access better mortgage rates
- Covering shortfalls between savings and asking price
- Paying for surveys, legal fees, and associated costs
- Avoiding high-interest personal loans
However, this may soon change — not because it’s illegal, but because lenders and the government are tightening control over where property funds come from.
What’s Changing & Why It Matters
The Government & Banks Are Reassessing Gifted Funds
The government is increasingly uncomfortable with the use of gifted money in property transactions — not because it’s unsafe, but because it’s difficult to regulate and tax.
Some key changes taking effect:
- One major UK high street bank has already stopped allowing buyers to use gifted money towards their mortgage deposit.
- Solicitors are required to carry out enhanced anti-money laundering (AML) checks on all transactions.
- Buyers must now show six months of documented proof for all funds, including gifted amounts.
“If someone needs £1,000 extra to pay for a survey, and a parent steps in to help, that can now cause delays or result in the mortgage being declined,” explains Sean. “This could mean missing out on a property altogether.”
Risks Buyers in Norwich Should Be Aware Of
Gifted money can still be used in many cases, but it’s no longer as straightforward as before. The process is becoming more rigid, with lenders expecting full transparency and detailed documentation.
Potential issues include:
- Your mortgage application being declined if gifted funds are not disclosed early
- Solicitors halting progress until AML checks are satisfied
- Delays that may lead to a property being sold to another buyer
- Unexpected costs if the transaction fails after surveys or legal work
These risks are especially concerning for first-time buyers, many of whom are already navigating complex property processes for the first time.
What You Can Do if You’re Planning to Use Gifted Money
If you are considering a financial gift from a family member as part of your home purchase, Sean recommends that you act quickly and prepare thoroughly.
Here’s how to avoid issues:
1. Disclose Gifted Funds Early
Inform your mortgage adviser and solicitor that a portion of your deposit will be gifted. They can then guide you on the necessary documentation and approval process.
2. Provide a Gift Letter
Ask the person giving the money to write a formal letter confirming that the funds are a gift, not a loan, and that they have no legal interest in the property.
3. Prepare Proof of Funds
Your solicitor will likely need to see six months of bank statements from the family member to show the source of the funds.
4. Avoid Last-Minute Transfers
Make sure the money is in your account in advance — surprise transfers close to the exchange date can raise red flags and cause delays.
5. Choose a Knowledgeable Solicitor
Work with a local solicitor who understands the evolving mortgage environment and Norwich market specifically. Sean can provide recommendations upon request.
A Real Example from Norwich
Sean recently assisted a young couple who had saved their deposit but were caught off guard when they needed an extra £1,000 for a structural survey. A relative offered to help — but due to tighter checks and timing, the deal nearly fell through. Under the new rules, such gifts may no longer be accepted at all.
This small amount could have been the difference between securing their first home or losing it to another buyer.
Frequently Asked Questions: Gifted Deposits & Mortgages
Can I still use gifted money for a deposit?
Yes, but only if your lender allows it and you provide full documentation.
Do solicitors check where the money comes from?
Yes. They’ll require six months of statements from the family member gifting the money.
Do I have to pay tax on gifted money?
Not at the time of gifting, but large sums may be subject to inheritance tax if the donor dies within seven years.
Will this affect my Lifetime ISA or Help to Buy?
Not directly, but the use of gifted funds must still meet lender and solicitor approval.
Should I get advice before accepting a gift?
Absolutely. Speak with your estate agent and solicitor early in the process.
Why This Matters to Buyers in Norwich
With property prices in areas like NR2, Taverham, and Thorpe St. Andrew continuing to climb, the average first-time buyer deposit can range from £10,000 to £25,000. Even a small shortfall could derail a purchase if the process isn’t managed properly.
Sean’s local knowledge, direct involvement in every transaction, and close working relationships with solicitors across Norwich means clients are less likely to be caught out by sudden changes like these.
Speak to a Local Estate Agent Who Can Guide You
If you’re planning to buy your first home in Norwich and think you may need financial help from family, now is the time to act. With one-to-one support and honest advice, Sean can help you navigate these changes and secure your new home with confidence.
Contact The Good Estate Agent Norwich:
📍 Based in Norwich
Call Sean directly on 01603 850860
Email: seanperegrine@thegood.co.uk