Treasury minister David Gauke profited from a rise in the value of his second home, bought with help from the taxpayer before new rules outlawed the practice.
Mr Gauke, MP for South West Herts, bought the one-bed flat in Lambeth in 2007 with a 95 per cent mortgage. Interest on the loan was paid for by taxpayers under rules that allowed it at the time.
He also claimed £10,248.32 in MPs’ expenses to cover the stamp duty and other fees involved in the purchase.
But a rule introduced after the 2009 MPs’ expenses scandal has forced him to repay 95 per cent of the property’s rise in value since May 2010.
Mr Gauke had the flat valued at £310,000 back then, when it had already gone up in price by £25,000 compared to the £285,000 he paid for it in 2007.
Under new rules, the new Independent Parliamentary Standards Authority has also said MPs in Herts are not allowed to claim for second homes in London near the House of Commons.
MPs are also only allowed to claim for rent – not mortgage repayments – on second homes under the rules, which came into force in September.
Mr Gauke sold his second home a few months ago for £352,000, but will have to repay 95 per cent of the £42,000 rise in value to public coffers.
He is allowed to keep five per cent of the £42,000 and the £25,000 increase in value between 2007 and 2010, after paying capital gains tax.
Mr Gauke said: “I was one of the minority of MPs not asked to pay back any sums [in expenses] and I have got one of the lowest expenses claims over the seven-year period I have been an MP of almost anyone.”
He said the 95 per cent repayment was greater than his total expenses claims from 2010 to 2012 and that he bought the second home, despite only living in Chorleywood, as MPs often work in London until 11pm or later.