The mystery of the Blairs' vanishing mortgage

The financing of Tony Blair's £1 million London mews home - at the rear of his Connaught Square mansion - was at the centre of a mystery after his mortgage lender appeared to have dropped its interest in the purchase.

The Land Registry said that Cheltenham and Gloucester bank, which had placed a 'priority search' on the house to protect its right to lend on it, had allowed the search to lapse.

Officially the house is still registered as belonging to the architect who agreed to sell it to the Blairs - even though it is now having a £100,000 facelift on their orders.

And this more than five months after they were first reported to have exchanged contracts.

Mr Blair and his wife Cherie bought the mews home in Archery Close with the aim of connecting it to their £3.65million Connaught Square townhouse after MI5 and Special Branch advised that it would make the main building safer.

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It is being fitted with panic alarms, motion detectors and CCTV cameras as part of an extensive security system.

A spokeswoman for the Land Registry said that a priority search, placed by Cheltenham & Gloucester on the house on May 11, had expired on June 22.

A priority search is placed on a property by a buyer's main lender. "It means no one else can apply to lend the mortgage because that lender has priority," the spokeswoman said.

"The priority search was protecting Cheltenham & Gloucester's interest. Once a search expires, it is usual to see a transfer-of-ownership document from the lender but this has not happened in this case.

"Cheltenham and Gloucester no longer has any claim to lend on the property because the priority search has expired."

One security source claimed that the vanishing mortgage could indicate that the Home Office had stepped in to pick up some of the "security costs".

But Mr Blair's office firmly denied that the taxpayer would be funding any alterations.

While Mr Blair was still in office, Downing Street refused to rule out public funds being used to pay for alterations to the mews house if they could be classed as essential security work.

Taxpayers have already funded £43,000 of security work on Mr Blair's constituency home in County Durham.

An independent financial adviser said: "If the priority search is not repeated, it could mean the sale has fallen through. Or it may still be on but there is a major delay. Alternatively, a private loan may have been secured.

"If there is any Home Office funding of the property, you would expect at some stage to see a charge on the property from the Government. It would be in the form of an overage provision, which means that if the property increases in value, the Home Office will get back that increase in proportion to the money it has invested."

Another financial adviser said: "It would suggest that the Blairs have found the money for the house without needing to resort to a mortgage. Perhaps Cherie has had a windfall from her overseas speaking tours."

Land Registry records show that the Blairs have not found the money by remortgaging their Connaught Square property, which was purchased three years ago as their post-Downing Street base in London.

Neighbours have been angered by the Blairs' move into the area, complaining that their presence will cause massive disruption and could even put their lives at risk.

A spokesman for Mr Blair said the financing of the mews house was a private matter, but strongly denied that the former Prime Minister had received taxpayers' money for security alterations.

A spokesman for Cheltenham and Gloucester refused to comment.