The chancellor doubled the stamp duty threshold from £60,000 to £120,000 in a move yesterday to help homebuyers struggling to get on the property ladder. Stamp duty now kicks in at 1% on property prices over £120,000. Below that, sales are tax-free.

This is the first time the starting threshold for stamp duty has been raised for twelve years. The Treasury said the change was aimed at cutting the number of first-time and low-income buyers paying the duty, and "improving the efficiency of the housing market".

It will free an estimated 300,000 homebuyers from the duty each year and save each of them up to £1,200 in a move accountants KPMG said would cost the exchequer £250m in 2005-06.

However in London, the new threshold is expected to make little difference to the property market. A recent survey conducted by Rightmove reveals that just 2% of homes in London and 7% of those in the south-east were on the market for less than £120,000. Buyers in the north of Britain is the main beneficiaries.