The base threshold for stamp duty has been raised in the Budget by Chancellor Alistair Darling, removing the 1% charge for residential properties worth between £125,000-£250,000, however this only applies to first-time buyers and has been branded a ‘ tax loophole waiting to happen’ by the Council of Mortgage Lenders (CML).

Darling said: "The housing market has now stabilised and has begun a slow recovery. But many first-time buyers, particularly those without large deposits, still find it hard to get a mortgage. I want to help them, but in a way that is properly funded."

The change was implemented immediately and will last for two years. Darling believes it will enable nine out of ten people buying their first home to avoid having to pay the tax. According to both Nationwide and Halifax the typical UK home costs just over £160,000.

Stewart Baseley, executive chairman of the Home Builders Federation (HBF), said: “This Budget is a huge boost to both home buyers and the house-building industry. I am pleased the Government has recognised the importance of ensuring that people are able to buy homes.”

However because of this change, properties which are at the lower end of the £250,000-£500,000 band, that are liable for a 3% stamp duty, will be on the threshold and so become out of reach or harder to sell to first-time buyers. For example a property worth £251,000 will result in a stamp duty charge of £7,530 whilst a property costing £249,000 would be nothing or £2,490 depending on the buyers’ circumstances.

Properties worth over £1m are now liable to a stamp duty charge of 5% and with 81% of all UK homes worth over £1m located in London and the South East it is likely to cause a rush of million-pound property owners selling up in order to avoid the increase in tax.

Nicholas Leeming, commercial director of Zoopla, said: “Taxing the rich makes a good headline, but it won’t raise much money for the Government’s fiscal black hole. Only around 4,100 homes sold above the £1m mark in the last year. With the total stamp duty tax take reaching almost £3bn last year, this measure will contribute only roughly 2% extra tax, a tiny amount. Raising stamp duty on £1m homes is a cynical move by the Government to tax home buyers who tend not to be their core voters. The burden will fall overwhelmingly on London and the South East.”

London is home to 57% of all property millionaires with the largest share residing in Kensington (W8) where 48% of all properties are worth over £1m with an average price of £1,566,549, next on the list is South Kensington (SW7) where there are 39.1% with an average price of £1,258,986 . Outside the capital, Virginia Water in Surrey leads the property millionaire stakes as 28% of homes are worth over a million pounds, compared to a national average of just 0.88%.

The stamp-duty cut is projected to cost the Treasury £230m in 2010-11 and £290m in 2011-12, while the new stamp duty band on £1m-plus properties is predicted to raise £90m in 2010-11, £70m the next year and £230m in 2012-13. Homes costing between £500k-£1m are liable to a charge of 4% in stamp duty.