From 1 May 2025, the UK will require Purpose Codes for the CHAPS Payments in all property transactions. These new rules aim to improve transparency and reduce financial crime. As a result, they will directly impact how conveyancers, law firms, and property buyers process payments.
Moreover, at Dawn Solicitors, we stay ahead of regulatory changes, so we can guide our clients through these important updates effectively.
Purpose Codes for payments clearly indicate the reason for each payment. CHAPS (Clearing House Automated Payment System) provides a high-value, same-day payment service for large property transactions in the UK. As a result, these new codes offer greater transparency by explicitly identifying the purpose of each transaction.
For example:
HLRP (Property Loan Repayment) – This code is used when repaying a mortgage.
PCOM (Property Completion Payment) – Use this code when completing a property purchase.
Additionally, these transaction identifiers are part of the ISO 20022 global messaging standard. This standard aims to enhance the speed, security, and efficiency of international financial transactions, making it a crucial update for the conveyancing sector.
These standardised transaction labels aim to reduce financial crime. They clearly outline the intended purpose of each payment, making it harder for criminals to disguise the true nature of their transactions. As a result, banks can more easily identify unusual activity.
Additionally, this approach improves the accuracy of financial data. For this reason, conveyancers and law firms can manage client funds more securely, ensuring that payments reach the correct accounts without delay.
Conveyancers and law firms must adjust their payment processes to align with the new transaction classification requirements. In particular, bulk payments now require these specific classifications to avoid delays and reduce the risk of errors.
To prepare for these changes, conveyancers should take the following steps:
Update their payment systems – Ensure the software can handle the new codes to prevent disruptions.
Train staff on the new requirements – Clearly communicate the importance of using the correct codes for each transaction.
Collaborate with IT teams – Work closely with technical teams to integrate the newly required transaction identifiers for CHAPS payments into existing systems.
At Dawn Solicitors, we have already made these updates, so our clients can expect smooth and compliant transactions every time.
At Dawn Solicitors, we actively monitor regulatory changes to protect our clients’ interests. As a result, we can guide you through the latest requirements for CHAPS payments, ensuring your transactions remain compliant and efficient. Additionally, our experienced conveyancing team is ready to support you at every stage, from the initial contract to the final payment.
To contact a solicitor from our firm, simply call us at +44 1753 530 111 or send us an email on info@dawnsolicitors.com
The UK property market will experience a significant shift with the introduction of new classifications for CHAPS Payments. To avoid delays and ensure compliance, you should understand and implement these changes correctly. Therefore, contact Dawn Solicitors today, and we will guide you through your next property deal efficiently.
If the purpose code is missing or incorrect, the payment may be delayed or rejected. It’s essential to use the correct code for each transaction.
Yes, our team can work with you to integrate the new classifications required for CHAPS payments, ensuring compliance and seamless transactions.