Blairs buck the property crash

With most house prices in a state of flux across the country, Tony and Cherie Blair have managed to make a profit - on paper - of more than £2 million out of the central London mansion in Connaught Square they controversially bought in 2004 using a loan paid off through Parliamentary expenses.

The Blairs spent £3.65 million on the 19th-century property in Bayswater, close to Hyde Park. Two years ago they also bought an adjoining mews house for £800,000, knocking down its walls to make one house. Estate agents now estimate the former prime minister's five-bedroom, three-bathroom house could be worth around £6.6 million, based on the recent sale of a neighbouring property.

In 2004 Blair re-mortgaged his constituency home in Trimdon, County Durham for a second time, in order to secure a £296,000 loan from Cheltenham & Gloucester. This helped pay for the £182,500 deposit on the Connaught Square property. Blair then claimed the loan interest on expenses.

Despite the volatile housing market, Connaught Village - as the area around the square, formerly called Tyburnia after the nearby place of execution, is now known - is still seen as a good buy by wealthy prospective buyers.

They are attracted to the neighbourhood's proximity to Hyde Park as well as Mayfair's restaurants. The arrival of the Blairs also put the area on the map, estate agent Martin Bikhit, Kay & Co, told the Times, although some neighbours moan about the constant police presence at the former premier's house.

The Blairs will be hoping the estate agents are correct. In the past they have lost out on the property boom, despite buying in then up-and-coming areas such as Hackney and Islington. When the Blairs sold their Islington home after moving into Downing Street in 1997 they achieved £615,000 - a decade later it was valued at £1.8 million.