Chancellor Philip Hammond has announced that he will be abolishing stamp duty for all first time buyers making home purchases worth up to £300,000.
'So, with effect from today for all first-time buyer purchases up to £300,000, I am abolishing stamp duty altogether,' he said.
This will benefit 80% of first time buyers in London and 95% first-time buyers who pay stamp duty.
He said will abolish it on the first £300,000 for those buying properties up to £500,000, saving buyers £5,000.
According to the statement published on HM Treasury website, this means that the stamp duty bill of the average first-time buyer in London will nearly halve from £10,500 to £5,500.
The relief is expected to help over a million first-time buyers to get onto the housing ladder over the next five years. The relief will take effect from Budget day.
Martin Walshe, head of new homes at estate agents Cheffins said: 'Any help we can give to first time buyers to alleviate the burden of finding high deposits as well as footing the bills for all other moving costs should be considered. The issue in the main however, is the actual pricing of homes coupled with the severe lack of affordable property and unfortunately cutting stamp duty cannot help that.'
However, Anthony Rushworth, founder of housebuilding investment platform Homegrown, warned of potential unintended consequences of the measure.
'There are plenty of reasons for first-time buyers to be jumping for joy on the face of it but, in reality, they only pay Stamp Duty of £1,500 on average,' he said.
'Sparing them from this tax might not cause the exchequer any loss of sleep but all this will likely do is feed into higher prices for the narrow band of properties they are fighting over.
'This is the problem with strategies that boost demand without addressing the fact there are too few homes being sought by too many buyers.'