The move will affect both commercial and residential property and the Chancellor said it would encourage investment and enterprise in some of the country's poorest areas. Regeneration Minister Lord Falconer welcomed the announcement. 'This is great news for businesses and homeowners in some of our poorest areas. It will encourage both to locate and thrive in wards that badly need investment,' he said.

The Royal Institution of Chartered Surveyors also applauded the announcement. RICS Policy Officer Joanna Sumner said: 'We are trying to secure the importance of the state's role for the purposes of regeneration. Strict European Union state aid rules have meant that previous initiatives have fallen down. We need to encourage this kind of support throughout the UK and beyond.'

But Will McKee, Chief Executive of the British Property Federation, was disappointed that Gordon Brown had not heeded the BPF's call for a wider cut in Stamp Duty for commercial property in general. McKee warned: 'The sector has performed well in the strong economy of the last few years, but this has masked underlying problems, in particular the impact on value and liquidity of the imposition of higher rates of Stamp Duty. As the property cycle now matures, their impact is becoming more obvious resulting in the sector being fundamentally less competitive than it was four years ago.'