Stamp duty will be abolished immediately for first-time buyers buying a home of up to £300,000, Chancellor Philip Hammond has said.
For properties costing up to £500,000, no stamp duty will be paid on the first £300,000.
Mr Hammond said this meant 95% of first-time buyers would see stamp duty cut, while 80% would pay none at all.
The change will apply in England and Northern Ireland, and in Wales up until the end of March, but not in Scotland.
Scotland has an independent system of land tax. Stamp duty will be devolved to Wales from March 2018.
In the rest of the UK stamp duty is paid on all residential properties worth more than £125,000. The duty is levied at a staggered rate above that threshold, starting at 2% but increasing in line with the value of the property being bought.
The Office for Budget Responsibility (OBR) said the main beneficiaries would be existing homeowners, rather than first-time buyers, because it expects all house prices to rise by 0.3% within a year as a result of the change.
It also estimates that it will result in only an additional 3,500 first-time buyer purchases.
However, the chancellor insisted that young people will benefit.
“This is our plan to deliver on the pledge we have made to the next generation that the dream of home ownership will become a reality in this country once again,” Mr Hammond said.
The policy will cost the Treasury £3.2bn over the next five years.
Andrew Norfolk, who is saving to buy a property in Cambridge, said the Stamp Duty change was a start, but more could be done.
“As a 26-year-old, working in a well-paid professional job, I find it ridiculous how difficult it is to get on the ladder without help from mum and dad.
“If I’m struggling – and I consider my position more fortunate than most – how on earth do most people ever stand a chance at home ownership?”