John Healey has been urged to cut stamp duty on newly built homes in a move that one of Britain's biggest housebuilders estimates could hand the Treasury a £4.2bn windfall.

In its Budget submission, Berkeley Group told the Chancellor that cutting the levy could revive a market that it warned was "sliding over an economic cliff edge".

In the submission, seen by The Telegraph, the listed property developer called for stamp duty to be capped at 1pc for first-time buyers and downsizers.

It also urged Mr Healey to scrap a 5pc surcharge levied on investors in new-build rental homes.

The housebuilder estimated that the package could deliver an extra 60,000 homes per year.

Rob Perrins, the executive chairman of Berkeley, said: "Our position has always been that a stamp duty reduction on new-builds – especially around the investor surcharge, first-time buyers and downsizers – is the best and quickest lever.

"This is still needed alongside Your First Home to restart homebuilding in urban areas."

The intervention came after Andy Burnham unveiled Your First Home , an equity loan scheme aimed at assisting more young people on to the housing ladder.

Designed as a scaled-back version of the previous Help to Buy initiative, the policy will be open to first-time buyers with a 2.5pc deposit, with backing from a 20pc equity loan from the Government.

Mr Healey is expected to formally launch the new policy in the Budget later this month .

However, Berkeley's submission suggested the scheme would not be enough to solve an "acute crisis, particularly in London".

The Treasury also reportedly rejected calls for a stamp duty break for downsizing homebuyers earlier this month.

Berkeley argued that higher interest rates, geopolitical uncertainty and rising taxes had led to a "significant slowdown in the rate of new housing sales ".

Only 8,840 private homes were sold in the capital last year, according to the document, down 56pc since 2022.

The housebuilder acknowledged that a cap for first-time buyers could cost the Treasury money, but argued this would be more than offset by extra revenue for the public purse from investors and buyers downsizing.

Berkeley calculated that removing the 5pc investor surcharge would save the typical investor around £13,000, meaning sales would need to rise by just 7pc for the Treasury to break even.

Using figures from the Office for Budget Responsibility, Berkeley estimated that scrapping the charge would unlock sales growth of at least 30pc, providing £4.2bn to the Exchequer.