The Government has announced an increase in the stamp duty threshold from £125,000 to £175,000 for residential property for the next 12 months.

This relief will apply to transactions with an effective date on or after 3rd September 2008 and before 3rd September 2009 it said, as the Government moves to revive the house market.

The change in rate means that someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.

Meanwhile, a £1 billion housing package has been announced by Communities Secretary Hazel Blears which aims to help first time buyers struggling to get onto the housing ladder, support vulnerable homeowners at risk of repossession, and support the house-building industry.

The scheme aims to offer 10,000 first time buyers currently frozen out of the mortgage market the chance to get onto the property ladder through a new £300m shared equity scheme.

Additionally, 6,000 of the most vulnerable homeowners facing repossession will get help to remain in their home through a £200m mortgage rescue scheme.

Communities Secretary Hazel Blears said:

“This Government is committed to practical action to help those most affected by the current state of the housing market. We are working to make sure everyone struggling to pay the mortgage gets support and advice. We are giving a leg-up to first-time buyers keen to own a place of their own. And by bringing forward our investment in social housing, we are both getting more decent, affordable housing ready for people to live in sooner, and helping the house building industry weather tough times.”

Housing Minister Caroline Flint added: “We are determined to continue to do everything possible to promote long- term stability and fairness in the housing market. The measures announced today will go significantly further in supporting families who may be facing difficulties at the moment, while ensuring we maintain our focus on delivering more affordable homes over the long term. We must ensure that repossession is only ever a last resort. The Government is determined to play its part, and others must do the same. Lenders should be exhausting all avenues before repossessing, including looking at how they could extend mortgage rescue schemes to householders.”