Gifted deposits for buy to let mortgages

If you're thinking about investing in a buy to let property and planning to use a gifted deposit, it's essential to understand how lenders view this and what rules apply. While gifted deposits are common in the residential market—often between family members—they're treated differently when it comes to buy to let mortgages.

As a specialist mortgage broker, we often help landlords navigate the complexities of gifted deposits. Here's what you need to know.

What is a gifted deposit?

A gifted deposit is money given to you—usually by a family member—to help fund the deposit on a property. This is not a loan, and the person gifting the money must declare that they do not expect repayment and will not have any legal interest in the property.

Can you use a gifted deposit with a buy to let mortgage?

Yes, some buy to let lenders will accept gifted deposits—but not all. The buy to let market is more restrictive than the residential one, and each lender sets their own criteria.

Here are the key considerations:

Who can gift the deposit?

Most lenders will only accept gifted deposits from close family members, typically:

• Parents or step-parents
• Grandparents
• Siblings
• Children

Gifts from friends, distant relatives, or business partners are usually not accepted. Some lenders may make exceptions, but it’s less common.

Gifts from overseas

If the funds are coming from outside the UK, lenders will often want to see:

1. Proof of the source of funds
2. The transfer trail into a UK bank account
3. Compliance with anti-money laundering (AML) checks

Some lenders won't accept overseas gifts at all, while others have strict documentation requirements. This is an area where it's especially important to speak to a broker early.

Documentation required

To use a gifted deposit for buy to let, you’ll usually need:

• A gifted deposit letter (or declaration) from the donor
• Proof of ID and address for the donor
• Evidence of the funds (e.g. bank statements)
• Sometimes a declaration of the relationship between the donor and the buyer

The letter should confirm that:

• The money is a gift, not a loan
• The donor has no interest in the property
• The gift is non-refundable

Impact on mortgage eligibility

Lenders see gifted deposits as a higher-risk scenario in buy to let cases, because they want assurance that the borrower has “skin in the game.” Some lenders may:

• Decline the application outright
• Restrict the loan-to-value (LTV)—e.g., cap it at 60% or 65%, rather than allowing higher LTVs

However, there are lenders who are comfortable with gifted deposits, especially when coming from parents or close relatives, and where the rest of the application is strong.

Limited company buy to let mortgages 

Lenders tend to be cautious—or outright reject—limited company buy to let mortgage applications involving gifted deposits for a few key reasons. Here’s a breakdown of why this happens:

Ownership and control risks

When a gifted deposit is involved with a limited company, lenders become concerned about who actually controls the funds and the company. For example:

• Is the gift truly to the company, or to one of the directors/shareholders personally?
• Could someone outside the company (e.g. the donor) try to claim a stake in the property later?

These questions raise legal and regulatory risks for the lender, especially around ownership rights and enforceability in case of default.

Anti-Money Laundering (AML) concerns

Companies are already subject to stricter AML scrutiny than individual buyers. If a deposit is being gifted to the company from a third party, particularly from overseas, it becomes more difficult for lenders to:

• Prove the source of funds is legitimate
• Verify the relationship between the donor and the company
• Trace the origin and intended use of the money
• This increases the compliance burden on the lender and makes them more risk-averse.

Perceived lack of financial commitment

Lenders like to see that the borrower has "skin in the game." When a limited company is buying a property using someone else’s money for the deposit, it can suggest:

• The company doesn't have sufficient funds of its own
• The directors or shareholders aren’t financially committed
• There may be an attempt to structure a deal in a way that reduces personal risk, which lenders generally dislike

This can signal higher risk of default or lack of accountability.

Legal and lending structure complexity

Lending to a company already involves more legal structuring (e.g., personal guarantees, SPV checks, director credit checks). Add a gifted deposit into the mix and it introduces extra legal and logistical layers, such as:

• Who owns the funds?
• Is the gift made to the company or to the shareholders, and then injected into the company?
• Is the donor expecting any influence over the property or rental income?

These questions can complicate underwriting, making lenders reluctant to proceed.

Very few lenders allow it

Most lenders simply don’t have policy in place to handle gifted deposits to limited companies, so they default to declining such applications. It’s not necessarily that it’s always a bad risk—but without a policy framework, lenders err on the side of caution.

Are there any exceptions?

Yes, there are a small number of specialist lenders may consider gifted deposits for limited companies in niche scenarios, especially if:

• The deposit is from a director personally
• The company is an SPV (special purpose vehicle) with a clear structure
• All parties involved are UK-based and can meet AML and credit requirements

But these cases need to be structured carefully, and almost always require the guidance of a specialist broker, so if this is the path you are going down, talk to our advisor team.

What is gifted equity and how is it different?

Another variation on a gifted deposit is gifted equity, where a family member who is selling you a property allows you to buy it below market value, and the difference in price is treated as a gifted deposit. Some lenders accept this set-up—but again, it’s niche and very lender-specific.

As before, where an application is through a limited company, it is even more difficult to find a lender who will accept this scenario so help from our specialist broker team will be invaluable.

Final thoughts on buy to let mortgages and gifted deposits

Using a gifted deposit to fund a buy to let purchase can be done, but it’s not as straightforward as in the residential market. The key is to work with a broker who knows which lenders are open to gifted deposits and how to present your case effectively.

At Commercial Trust, we work with a wide panel of specialist buy to let lenders—some of whom are comfortable with gifted deposits under the right circumstances. Whether you’re a first-time landlord or growing your portfolio, we’ll help you navigate the criteria and find the right solution.

If you have an offer accepted on a property, have arranged a gifted deposit and are ready to apply for a buy to let mortgage, call our team on the Freephone number above or enquire online.