Properties costing less than £175,000 will be exempt from stamp duty for the next year in an attempt by the Prime Minister to revive the stagnant housing market.

The £600 million measure will take more buyers at the bottom end of the housing market – likely to be first-time purchasers – out of the stamp duty bracket altogether, saving them up to £1,750.

The average UK property costs £164,000 this month and at present homebuyers purchasing properties that cost between £125,000 and £250,000 have to pay 1 per cent of the price to the Government in tax.

The concession will not extend to buyers of properties worth more than £250,000, who will continue to have to pay 3 per cent in stamp duty. Homes above £500,000 attract 4 per cent tax.

The Prime Minister's £1 billion rescue package also includes schemes to help families in danger of having their home repossessed, to provide more council houses and to help first time buyers get into the housing market through joint equity plans.

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