For buyers of UK property hoping to cash in on a <a href="https://www.thenationalnews.com/business/property/how-changes-to-britain-s-stamp-duty-scheme-affect-middle-east-property-investors-1.1156080">government tax break</a>, completing the transaction is a race against time. The stamp duty land tax holiday in England and Northern Ireland, which was first unveiled by Chancellor of the Exchequer Rishi Sunak in July last year, allows the first £500,000 ($697,747) of a purchase to be exempt from the levy. Similar initiatives have been unveiled in Wales and Scotland. With the tax break ending on June 30, tapering down to £250,000 from July 1, there has been a surge in buyers seeking to complete their transactions before the deadline and bag a saving worth up to £15,000. "We are hearing of conveyancing lawyers working through the night at the moment to try to meet the deadline," Camilla Dell, managing partner at Black Brick, which helps Middle East investors purchase property in the UK, tells <i>The National</i>. “However, not all will make it – there are just days to go until the stamp duty holiday ends and over 700,000 transactions going through the conveyancing process.” While Middle East investors "have certainly benefited" from the tax bonus, Henry Faun, partner and head of Knight Frank's Middle East private office, says its removal will not dent the "<a href="https://www.thenationalnews.com/business/property/gulf-demand-for-london-property-soars-but-deals-won-t-happen-until-flight-curbs-ease-1.1222933">strong appetite for UK property</a>". "The holiday has been positive for buyers but when it ends, we see the <a href="https://www.thenationalnews.com/business/property/gulf-demand-for-london-property-soars-but-deals-won-t-happen-until-flight-curbs-ease-1.1222933">strong interest for UK property from the Middle East region</a> continuing as normal," he says. Tax is already an issue for Middle East investors interested in UK property. The government bumped up the levy for non-resident investors by 2 per cent in April. This was on top of an existing 3 per cent for buying a rental property or second home. Despite a further tax increase from June 30, Mr Faun says strong demand for UK property “will not be quelled”, with the main drivers for interest being the country’s consistent market, ease of language, a good education system and lifestyle. One issue actually <a href="https://www.thenationalnews.com/business/property/gulf-demand-for-london-property-soars-but-deals-won-t-happen-until-flight-curbs-ease-1.1222933">preventing transactions with Middle East buyers</a> is the <a href="https://www.thenationalnews.com/world/europe/uk-traffic-light-system-for-travel-explained-1.1197723">UK's traffic light system for travel</a>, with most countries in the region on the red list, meaning a 10-day hotel quarantine for anyone who intends to fly in to view property. “There is significant pent-up demand across the Middle East for property in the UK and specifically London,” says Mr Faun. “While we conduct digital viewings, live tours and 3D property walk-throughs, many clients prefer to travel and view the properties in person before committing to the purchase.” Ms Dell says the end of the stamp duty holiday will have a negligible effect on the appetite of Middle East investors for UK property as many are unable to travel anywhere, due to them being in red-list countries. Those proceeding with deals at the higher end of the spectrum will also be unfazed. “I do not think a £15,000 saving makes a huge amount of difference to a Middle East buyer spending many millions on UK real estate. They tend to be more concerned about other taxes such as inheritance tax, capital gains tax and, of course, currency rates,” says Ms Dell. However, the stamp duty deadline is much more of an issue for buyers in the UK rushing to complete deals before the deadline. Some are resorting to extreme measures to ensure they complete in time, such as cutting corners on essential surveys for flood threats or subsidence. About 50,000 buyers are at risk of missing the deadline, according to property website Zoopla. Meanwhile, demand for removal vans has increased by 200 per cent before the deadline, compared to the same time last year, according to website AnyVan. Some buyers are putting possessions in temporary storage as the cost of moving home doubles. Conveyancers have also raised fees to cope with the surge in demand. "One thing is abundantly clear: the stamp duty holiday has had a material effect on England's housing market," Danni Hewson, A J Bell financial analyst, tells <i>The National</i>. “Figures from the Office for National Statistics show a record number of transactions across the UK in March as people in England raced to beat the original deadline.” Mr Sunak introduced the stamp duty holiday in July last year to help bolster the property sector as the UK’s wider economy was hit by the economic fallout of the Covid-19 crisis. The tax saving and pent-up demand for property sent the market soaring, with <a href="https://www.thenationalnews.com/business/property/british-house-prices-soared-8-5-in-2020-to-average-record-high-of-252-000-1.1167929">property prices rising by 8.5 per cent last year</a>. <a href="https://www.thenationalnews.com/business/economy/budget-2021-rishi-sunak-pledges-to-rebuild-uk-through-covid-support-taxes-and-investment-1.1176863">The original March 30 deadline for the end of the tax break was extended</a> by Mr Sunak in his latest budget statement to prevent the market from falling off a cliff as the country was still under tight Covid-19 curbs at the time. In May, <a href="https://www.thenationalnews.com/business/property/uk-average-house-price-soars-3-000-in-a-month-to-record-high-of-261-743-1.1236426">prices surged to a high of £261,743</a> on average, according to the Halifax House Price Index, up 9.5 per cent from the same month a year earlier and equal to £22,000 over 12 months. With buyers “on a clock once again”, house prices are “on fire”, with more records set to be broken as the June deadline approaches, says Ms Hewson. The end of the full stamp duty holiday is unlikely to halt momentum either, she says, because the scheme is tapered so that people “snapping up property between £125,000 and £250,000 will still save cash until the end of September”. Other factors driving the market include the shift to remote working, which has fundamentally altered what many people are looking for from their homes. “Offices and gardens now have more sway than good transport links and people are prepared to pay for this lifestyle reset, particularly as many people who were able to work from home have also amassed savings through lockdowns,” says Ms Hewson. “It is no surprise house prices have seen the greatest surge across the north of England, where average prices are still well under the £250,000 threshold. Even after September, the stamp duty payable will not phase people relocating from more expensive parts of the country. Demand is far outstripping supply, and the sharp rise of low deposit options is also adding to the number of buyers swimming in the pool.” Despite the number of Covid cases rising in the UK once again, Ms Dell is “almost 100 per cent certain” the tax break will not be extended further. “The chancellor would be mad to add further fuel to the fire as it is quite clear from the data that the housing market doesn't require any further government support,” she says. Buyers from the Middle East are already playing a more active role in the UK property market, snapping up 16 per cent of all property sold to overseas buyers in the first three months of this year, according to recent data from property consultancy Knight Frank. The proportion of property bought by regional investors is lower than that for investors from Europe (who made up 59 per cent of overseas purchasers) and Asia (18 per cent). However, it is the highest since the onset of Covid-19 and is expected to rise further when travel restrictions ease, the consultancy says. With <a href="https://www.thenationalnews.com/business/property/gulf-demand-for-london-property-soars-but-deals-won-t-happen-until-flight-curbs-ease-1.1222933">numerous buyers waiting for travel to open before they close on their investments</a>, Mr Faun expects the market to surge even more. However, prices in the UK capital are on the up anyway, he says, picking up from where they left off after the general election in December 2019, with buyers from the Middle East able to recognise good value after five or six years of falling prices. UK property prices are expected to record cumulative growth of 24 per cent by 2025, according to Knight Frank’s latest outlook figures. Prime central London is looking to grow the most in the coming few years, by 25 per cent, with rival agency Savills offering a similar outlook for the next five years. “Prime central London seems ripe for a revival at the moment as the majority price growth has been taking place outside of the capital,” says Ms Dell. Mr Faun says the benefit of the tax break tapering off as opposed to completely ending is that it removes the need for a “cliff edge” moment. “This is where transactions could potentially be renegotiated or withdrawn if the tax holiday completely ended all at once,” he says. “The market has been fully aware of the tax holiday tapering off for many months, so we do not foresee any significant shocks.” However, Ms Hewson is a bit more cautious. With support measures such as the furlough programme for the job market and mortgage payment holidays unwinding, Covid-19 is about to extract a huge cost for some people, she says. “The need to downsize will distort the market, particularly in parts of the country where house prices are highest,” Ms Hewson says. “But overall circumstances have conspired to relight the fire under the housing market. Barring a massive building programme, a huge interest rate hike or another economic bomb it is unlikely house prices will go anywhere but up, at least in the short term.”