The house Fergie didn't want

It has views of the South Downs, a swimming pool and a paddock. But only 16 months after buying this idyllic cottage Sarah, Duchess of York, has sold it again - without spending a single night there. Despite gazumping a family who had set their hearts on it, Fergie and her representatives decided the property wasn't for her after all.

Now, however, in a happy twist of poetic justice, Wareham House has been been bought by the family who lost out in the first place.

The Grade II listed house, dating back to the 16th century, came on to the market in spring last year with an asking price of £1.1 million. It has five bedrooms, four reception rooms with inglenook fireplaces, a small period barn, generous gardens and woodland.

The most serious would-be buyers were Simon Prichard, a chartered surveyor, and his wife Karen. But the couple, who have three young children, felt the price was too high as the property was in need of major refurbishment.

"We were renting locally, so we sat and waited, and in the summer the price started coming down," said Mr Prichard. "When it was reduced to £950,000 we put in a bid of £900,000 and the agents told us there was a good chance we would get it."

But their hopes were dashed. One Monday in July last year the cottage, near the

Surrey town of Haslemere, was viewed by the Duchess, who has been property hunting for several years. "By the Wednesday she had made an offer and it was hers," Mr Prichard recalled.

The house was bought that same month for £995,000 through three nominees - the Rt Hon David Alexander Cospatrick Douglas Home CBE; Rufus Nicholas Hambro; and the Rt Hon George Reginald Oliver Molineaux Herbert, Earl of Caernarvon, who had previously bought property for the Duchess.

The official register gives their addresses as c/o 66 Lincoln's Inn Fields, the address of the Queen's solicitors Farrer & Co.

After sealing the deal, Fergie acquired a parcel of land between the eastern side of the house and the main Haslemere to Godalming Road - useful to prevent snooping - and a triangular plot to the south of the house. That November she made a planning application for improvements costing £100,000, especially to the kitchen, and extensions for which she expected to pay herself. However, the application was not proceeded with.

It appears that the speed with which she had moved to buy the house meant security considerations were not taken into account. Essential measures to make the property and its royal occupants safe from terrorist attack or kidnap proved too expensive and the Palace refused to pick up the tab.

By spring this year the house was back on the market - to the delight of the Prichards. They submitted a new offer for over £1million and it was accepted by the Duchess's representatives-They have just exchanged contracts. "This is the house we had set our hearts on," said Mr Prichard. "It was a mutual deal and Fergie's people were easy to deal with, very straightforward."

Asked if he had any hard feelings about being gazumped, Mr Prichard said: "When you finally get what you had your heart set on, you tend to forget things like that."

Meanwhile, the Duchess will remain in the modest three-bedroom house she has been renting for £4,000 a month since 1999. Her daughters, princesses Beatrice and Eugenie, are reportedly thrilled to live in an ordinary house without servants. The house in Windlesham, Surrey, is close to Sunninghill, the 12-bedroom former marital home of Fergie and Prince Andrew.