It can feel frustrating going through the tedious process of identity checks when buying a home – but things are getting easier. Stephen Ward explains what your conveyancer needs to check and why
One of the biggest frustrations people have when it comes to buying a property is the time it takes to complete a purchase, and the number of checks involved.
From proving that you are who you say you are, that you have the funds, and that the money came from a legitimate source, it can feel unnecessary and time-consuming, especially when you’re asked multiple times by different people.
Conveyancers, estate agents and mortgage brokers are subject to stringent anti-money laundering (AML) rules imposed by government that are part of an international effort to combat crime and terrorism. They are liable if something goes wrong, so it is understandable that they would want to carry out these checks for themselves.
Fortunately, moves are being made to digitise and streamline the process so that you only have to go through ID checks once when buying a property. But do remember that such checks are also in place to protect your interests.
Identity checks – why they are so important
It is not so long ago that these checks were done in person, with conveyancing clients required to produce physical documents such as passports, driving licences, bank statements and utility bills to prove their identity.
These days, this is mostly done digitally using software that can take personal details and cross-reference them with mobile phone records, credit agencies, HM Passport Office or the DVLA in a matter of minutes.
From the point of view of protecting your data, it is more secure than sharing physical documents and it is also quicker and more convenient.
There are multiple digital identity tools currently on the market involving:
- Biometric verification: Techniques such as facial recognition or fingerprint scanning
- Liveness tests: Technology to confirm the genuine presence of a user
- Cryptographic checks: Ensuring that only the sender and recipient can view the messages
Verifying identity is a requirement of anti-money laundering (AML) rules but it is also crucial in stopping identity theft. There have been some horror stories where ID checks haven’t been done properly and fraudsters have ‘sold’ homes they didn’t own, or obtained a mortgage on them, before running off with the money.
So, if your conveyancer says they’re waiting on an identity check from the seller’s lawyers, remember it is for good reason – to stop you being sold a dud.
Why you need proof and source of funds
Most property purchases will of course involve a sizable deposit, as well as the other costs associated with buying a home, and you must be able to prove not only that you have the deposit but where it has come from. This is to show that the money is not from the proceeds of crime.
If you have accrued savings, it is likely that you will be required to produce bank statements and payslips, a P60 from your employer, or a tax return and other documents if you are self-employed. The Money Helper website has more information about what documents you need.
If some or all of your funding is from an inheritance, you will need evidence from the executor/s of the estate or, if you have been given the money by family or friends, you should ask them for a letter confirming its value and that it is a gift, that they have no rights over the property you buy, and proof of how they acquired the funds themselves.
With the continued trend of borrowing from the ‘Bank of Mum and Dad’, the requirement for such letters is becoming more frequent, and it is wise for you to have these conversations at the outset.
Many people may find being asked to disclose this personal information invasive, but it is necessary in order for conveyancers and other professionals involved in the process to fulfil their AML obligations and you will not be able to proceed without it. A conveyancer could lose their licence to practise if they do not do this.
Choosing a conveyancer – do they have digital tools?
The average property transaction, without complications or unforeseen delays, takes between three and four months from making an offer to completion.
If time is of the essence, it will be beneficial to choose a conveyancer who uses digital tools, making tasks such as identity checks and sharing documents much more efficient. You should also consider how you would like them to communicate updates; for example, many firms now provide secure portals where clients can track the progress of their transaction 24/7.
It is important to choose a conveyancer with relevant experience and one who is licensed and regulated so that you
can seek redress in the unfortunate event that something does go wrong.
Practices regulated by the CLC will have our badge prominently displayed on their website which, when clicked on, will take you to our site and confirm that the firm is genuinely regulated by us.
You can find a list of CLC-regulated conveyancers, as well as more guidance on buying and selling property, here.
Stephen Ward is director of strategy and external relations at the Council for Licensed Conveyancers
