Chancellor announces 'stamp duty holiday'

The Chancellor of the Exchequer has announced that stamp duty land tax will not be applied to homes worth £175,000 or less.

Alistair Darling's stamp payment suspension will run for one year from September 3rd 2008 but will only apply to properties used for residential purposes, the Treasury announced.

The Guardian reported that the exemption is an attempt to show the public that the government is looking after the needs of homebuyers during a time when property values have slumped and sales stagnated.

It is understood that the measure will create a £600 million hole in the budget over the next 12 months.

In an earlier interview with the newspaper, Darling was quoted as saying that the economic conditions in the UK "are arguably the worst they have been in 60 years".

According to the August Nationwide Monthly House Price Index, the average price of a home in the UK was £164,654, which is below the new temporary stamp duty threshold.