Financial News

Stamp duty is to be suspended for a year on properties that cost up to £175,000 in a bid to boost the ailing housing market.

The long-awaited freeze on the unpopular levy is to take place from Wednesday.

It forms part of an emergency rescue package for hard-pressed home buyers and owners.

Gordon Brown has unveiled the flagship scheme to help people who are facing repossession stay in their homes.

The Prime Minister will hope it can tackle spiralling repossession figures and bolster his approval ratings, after Alistair Darling admitted the economy had hit a 60-year low.

Under the scheme, which will cost £1bn, vulnerable families will be offered the chance to sell their home and rent it back at a cheaper price.

They can sell the property to a registered social landlord who will clear the mortgage and then offer them a cheaper price in rent.

They will also have the opportunity to enter into shared ownership of the property.

The policy is designed to help families struggling with mortgages, but also those attempting to get on to the property ladder.

First-time buyers whose household income is less than £60,000 will be able to buy newly built properties with an equity loan of up to 30% of the property's value.

Prime Minister Gordon Brown said: "Homeowners need to know that we will do everything we can to keep the housing market moving forward.

"Help with stamp duty, help for first-time buyers, help to build more social housing, help to take unsold properties off the housing market and help for people who get into difficulties.

"These are the things a government should do to help us come through what is a difficult situation and show that our economy is resilient and will come through these problems."

Recent figures show that the number of homes being repossessed hit their highest level for 12 years during the first half of the year.

Around 18,900 properties were taken back by lenders - 48% more than during the same period of 2007.

Last month the Chancellor was accused of damaging the faltering housing market when he refused to rule out a temporary suspension of stamp duty.

Estate agents claimed this was making buyers "wait and see" what might happen amid already dire house sales data.