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Chancellor George Osborne used his last Autumn Statement before next year鈥檚 election to give the housing market an unexpected 拢800m annual boost through a root and branch reform of stamp duty which will help buyers of homes under 拢930,000.

Osborne acted to abolish overnight the widely derided 鈥渟lab鈥� basis on which stamp duty is calculated, in a move that has long been called for and which was welcomed by lobby groups in the housebuilding industry. However, Osborne鈥檚 statement, which also included reforms to taxation of construction workers and firms employing apprentices, failed to provide a significant boost to capital spending in the North many had expected.

The reform of stamp duty, effective immediately, saw the introduction of new bands which Osborne said meant 98% of home sales will incur lower tax, effectively making it cheaper to buy any home under 拢937,500 in value. Osborne described the changes as a 鈥渇air, workable, lasting reform to the taxation of housing.鈥�

Osborne鈥檚 move means that stamp duty will now be calculated in the same way as income tax, with the proportion of the price of a property in each band taxed at the set rate. It will see an end to the current system whereby a home sale at 拢250,000 pays 拢2,500 in stamp duty, but a sale for 拢250,001 pays over 拢7,500.

A spokesperson for the Home Builders鈥� Federation said: 鈥淭his is something we鈥檝e always called for. The 鈥榮lab鈥� system penalised buyers and influenced what homes builders could build around the 拢250,000 value. The new system will create a more active market and boost new home sales.鈥�

Under the reforms, someone buying a home for 拢275,000, the UK average, will pay 拢4,500 less than under the previous system. However, someone buying a property for 拢5m will now pay over 拢500,000 in stamp duty, 拢164,000 more than previously.

Mark Farmer, head of residential at EC Harris, said the change would influence what developers in the London market were likely to build. He said: 鈥淭his will undoubtedly have an impact to cool the top end of the market. It will affect what people build. There鈥檚 already been a sense that prime London property is overvalued and developers have been looking further out - the stamp duty change will reinforce this trend.鈥�

The UK Green 好色先生TV Council described the reform as 鈥渢he mother of all missed opportunities鈥� because it failed to link the payment of stamp duty to the energy performance of the home being sold - something the group has argued for.

John Alker, Director of Policy and Communications at the UK Green 好色先生TV Council, said: 鈥淔or years we鈥檝e been told by Treasury that stamp duty cannot possibly be touched. But today鈥檚 changes blow a hole in that theory.鈥�

Osborne also used the speech to trail potential changes to the way construction workers are taxed under the Construction Industry Scheme, and plans to clamp down on 鈥渦mbrella companies鈥� which he said he would look to bring forward in next year鈥檚 Budget.