Why the stamp duty holiday almost cost my family our dream English home

Alice Haine shares a personal insight into how the tax break has distorted the country’s red-hot property market

Alice on the doorstep of her new home on the West Sussex border, after an eight-month journey to buy a home in the UK. Martin Bamford for The National

When I relocated from the UAE to the UK last summer, I could never have predicted the effect the UK's stamp duty holiday would have on my bid to buy a home.

Buying a property was a key priority to help my family of four settle back in after 15 years in the Emirates.

But within weeks of arriving back in Britain, it quickly became apparent that the market-boosting tax break introduced by Chancellor of the Exchequer Rishi Sunak was going to cause more problems than benefits.

Introduced in July last year to bolster the market after the entire sector ground to a halt during the first lockdown in the spring, the tax holiday offers buyers a saving of up to £15,000 ($20,817) on the first £500,000 of a property purchase.

"That is a nice little bonus," I thought at the time, and told my husband we needed to move fast to ensure we completed a purchase before the initial deadline for the tax bonus on March 30.

However, add a tax break to pent-up demand for homes after the lockdown and people's desire for more space amid the work-from-home trend, and prices soon started to spiral upward.

By the time I actively started our hunt for a home in October last year, it was clear we were going to have to hustle hard.

I would spy houses I liked on property site Rightmove and by the time I contacted the agent, the property was gone. So, when I spotted a rather cosy four-bedroom home in the village of Cranleigh in Surrey, where I was already renting, I contacted the agent and asked to view it that afternoon.

It was pouring with rain on a Friday evening when we pulled up outside the house, as a family of three dashed out and got into a car. Assuming they were the sellers, we politely waited for them to leave before going up to the front door and pressing the doorbell.

Despite the house being in semi-darkness because the storm had flicked the trip switch off, I knew within minutes this was the one and immediately phoned the agent’s office to book a second viewing.

The next morning, on a slightly brighter day, a different agent ushered us in and whispered: “If you want this property, you are going to have to move fast.”

That family we had seen the day before were actually rival buyers who had demanded a second viewing before us.

It later transpired there were four buyers competing for the same home. We put in an offer within 30 minutes, £15,000 below the asking price to give us some wiggle room, but the reply came back quickly: “The buyer wants full asking price.”

We matched it and waited and then bingo – it was ours – or at least we thought it was.

Over the next few weeks, the number of coronavirus cases began to ramp up and England entered a second and then third national lockdown.

The house survey was repeatedly delayed as Covid restrictions made it harder for surveyors to gain access into homes, and sellers seemed increasingly anxious about moving.

Then in January, three days after a phone call confirming the sale was going ahead, the house was pulled from the market. The sellers had changed their minds about moving.

It was a massive blow. We had mentally moved into the new home and had begun to plan wallpaper, curtain colours and where to place furniture.

We knew we needed to start again, but by then prices had accelerated to a new level. The same type of houses we had viewed just two months earlier had jumped in price by tens of thousands of pounds.

Alice's new garden satisfies a post-pandemic preference for more outside space, a factor driving the UK housing market. Martin Bamford for The National

With the March 30 end of the stamp duty holiday looming, we knew the £15,000 tax saving was out of our reach as there was no way the purchase process could be completed in time when you factor in all the conveyancing and surveys.

Meanwhile, the property sector was already struggling with the volume of demand as conveyancers, removal companies and estate agents tried desperately to keep pace.

And all the time prices were going up.

In 2020 alone, average house prices were up 8.5 per cent from the year before. By February they had accelerated even more.

We widened our search, looking at villages around Cranleigh – our first choice of location.

This time we were ready to go in fast. We found another property we liked in a nearby village and after a second viewing placed an offer within a couple of hours, at the full asking price.

But it wasn’t enough. Two other buyers matched us and it went down to a blind bid, where we all submitted a final offer.

We offered £12,500 above the asking price, but the winning bid was almost £50,000 above the guide price. It felt brutal.

We heard of other sales where buyers went up to £100,000 above the guide price.

Once again, we dusted ourselves down and carried on looking – finally stumbling on a home in the small village located in West Sussex, just over the border from our former Surrey base.

We wasted no time, viewing the property that day and putting in an offer at full asking price within 30 minutes. The bold move paid off.

Moving home is a challenge for people in the UK due to a shortage of removal companies amid the stamp duty frenzy. Alice Haine / The National

That was in February and on March 3, we had some great news –  Mr Sunak was extending the stamp duty holiday until June 30 to give buyers more time to complete purchases and prevent the sector from falling off a cliff edge.

With plenty of time to complete the deal, we calculated that we would save thousands of pounds – it felt like a gift.

However, the joy was short-lived. As March went by, so did April and then May. While we had completed all our paperwork to close the deal, we were in a chain of buyers, who like us were equally keen to close the transaction as quickly as possible.

By this point, the property sector was under severe strain as it struggled to cope with the volume of transactions.

And prices were still increasing. In May, they rose to an average record high of £261,743, up 9.5 per cent from the same month a year earlier and up £3,000 from the previous month, according to the Halifax House Price Index.

The volume of deals meant others in the buying chain were struggling to ensure their documents were assessed or have any glitches in the process fixed by their solicitors.

Plus, if we did not hit the deadline, there was a risk that some people in the chain would not be able to afford to pay the full tax, meaning several deals, including ours, could collapse.

Closing the deal by June 30 seemed increasingly unlikely, with that tax saving drifting away from us once again.

We were no strangers to the challenges presented to the property market by the pandemic.

In March 2020, while still residents in Dubai, we were a couple of days away from completing the sale of our old home in London when the first lockdown brought the property market to a standstill.

We had to wait about two months before the sector finally reopened and the deal could cross the line – an agonising eight weeks of uncertainty.

Now that uncertainty was upon us once more.

Then unexpectedly, an email came from our lawyer: we would exchange that day with completion on June 22.

We waited patiently, anxious not to celebrate too soon as anything can go wrong in the transfer of cash on a property sale.

We waited patiently, anxious not to celebrate too soon as anything can go wrong in the transfer of cash on a property sale.

Not only that, we could not find a single removal company to shift our belongings from our temporary rental home to our new pad. They were all booked up.

It appeared we were going to have to move it all ourselves, quite a feat considering the number of solid pieces of wooden furniture we had acquired during our years in the UAE.

Then everything came right. A removal company said it would take on a double booking and start our move at 2pm in the afternoon.

Days later, completion went ahead, miraculously without a single hurdle.

After the lawyer phoned to confirm the deal was done, I put down the phone and burst into tears. Moments later, there was a knock on the door. The packers had arrived.

“Good timing,” I said through tears. “We’ve just completed.”

“Happy tears I hope,” the female packer said, giving me a pretend hug, in line with Covid social distancing rules.

“Yes,” I nodded.

Alice moved eight carloads of belongings herself due to the shortage of removal services in the country. Alice Haine / The National

We may have made it across the line with eight days to spare, but tens of thousands of UK buyers will not make the cut to secure the £15,000 tax benefit.

While no stamp duty will be applied to the first £250,000 until September 30, property agents say momentum in the market is still there, with prices set to continue upward for now.

With pent-up demand from countries in the Middle East, where residents are prevented from flying in to view properties due to the UK’s quarantine rules, it seems there will be even more interest further down the line, which could send prices spiralling even higher.

It may have taken until 2am to complete our actual move into the house, with me moving eight carloads myself, but we feel extremely lucky to have made the stamp duty cut-off point in a red-hot housing market.

Alice reviews the family photo album as she unpacks boxes following the move. Martin Bamford for The National