Purchase Codes and Property Related Payments
Changes in banking standards mean that from 1st May 2025 law firms handling conveyancing transactions will need to include a Purpose Code for some property related CHAPS payments.
To assist legal cashiers and accounts teams, we have compiled several resources, along with a list of frequently asked questions below.
What are Purpose Codes?
When sending a payment, purpose codes are a simple way for the payer to describe the purpose of the payment, which then makes it easier for banks to detect potential fraudulent transactions.
Purpose Codes form part of the new banking messaging standards being rolled out by the Bank of England as part of its RTGS renewal programme. The standards being adopted are also aligned with the global ISO20022 payment messaging standard.
When do Purpose Codes become mandatory?
Purpose Codes for some property related payments become mandatory on 1st May 2025. The deadline was originally November 2024, however the Bank of England pushed the date back due to industry feedback.
You can read more about Purpose Codes for property related payments in our Knowledge Base.
By mandatory, the Bank of England means that it expects Financial Institutions to require this information to be included for property related payments. From a technical perspective the bank will not be enforcing the rejection of payments that are not coded until at least 2026 - any enforcement that is needed will be based on the CHAPS rulebook.
What is the purpose of Purpose Codes?
Purpose Codes for property related payments is the first of many changes coming to banking payments over the next few years. These once in a generation changes are intended to help prevent fraud and money laundering.
As the use of Purpose Codes becomes more widespread for payments between firms, lenders and clients, it will be easier for banks to spot fraudulent property related payments, e.g. the settlement of a property loan going to anyone other than a lender would be unusual.
How do I use Purpose Codes?
Purpose codes will most likely appear as a dropdown list when initiating a CHAPS payment through online banking. For firms uploading payments as a batch, your upload will likely need an extra column including where the appropriate Purpose Code can be added.
What Official Guidance Has Been Published for Law Firms and Conveyancers?
Guidance has so far been published by the Bank of England, along with the Council for Licensed Conveyancers (CLC).
Detail on Mandating ISO 20022 Enhanced Data in CHAPS (Bank of England)
Guidance for CLC Regulated Firms (Council for Licensed Conveyancers)
