Downing Street has dismissed reports the government is thinking of imposing stamp duty on the sale of houses as "complete blather".

No one in government is looking at this

Downing Street

The government is anxious to take the heat out of the property market and ease the shortage of low-cost housing for key workers, such as nurses and teachers.

But suggestions ministers are considering the introduction of stamp duty on house sales as well as purchases were dismissed out of hand by the prime minister's official spokesman.

"No one in government is currently looking at this," he said.

House building programme

According to a report in the Daily Telegraph, the idea was being considered by Number 10's strategy unit.

What Britain needs is more properties on the market, not a nonsense plan like this

Adrian Sanders, Liberal Democrats

It said the government was considering charging home owners more stamp duty the longer they remained in their property.

Downing Street admitted the proposals, by in-coming health department chief economist Barry McCormick, were raised at a seminar during a "freewheeling" discussion on housing policy.

But a spokesman insisted it did not reflect current government thinking.

Stamp duty was a tax "and that is a matter for the treasury not the health department", the prime minister's spokesman said.

'Nonsense plan'

Ministers are concerned about the lack of mobility in the labour market because people cannot afford to move house.

Commenting on the idea, Liberal Democrat housing spokesman Adrian Sanders said: "What Britain needs is more properties on the market, not a nonsense plan like this."

He said the government was simply "pretending" to deal with the housing crisis while it was getting worse by the day.

Stamp duty is charged on house purchases above �60,000.

Building boom

If you buy a property for between �60,000 and �250,000 you have to pay 1% Stamp Duty. Those between �250,001 and �500,000 are taxed at 3%.

Properties over �500,000 incur a 4% charge.

Stamp duty rates have increased four times over the past five years.

In the year to April 2001, it generated �2.2bn in government revenue, compared to only �675m in 1996/1997 - a three-fold increase.

Property prices have been reported to be rising by up to 20% over the past year, with schools, hospitals and police forces amongst those complaining that soaring prices are hampering recruitment in more expensive areas.

It is widely expected that proposals for a huge �1bn increase in building of affordable homes is to be announced within the next few days.