Mortgages, stamp duty and the other headaches of homeowning lie ahead

The stamp duty alone could buy a detached house in the Prime Minister's constituency of Sedgefield but the Blairs' most recent acquisition is a significant foothold on the London property ladder.

The Blairs' £3.6m Connaught Square property will mean a stamp duty of around £146,000 - a payment they avoided on their last move by carrying out a house swap.

But this is just one aspect of the delicate financial situation awaiting the Blairs- a problem they have not had to contennd with since they moved into Number 10, Downing Street seven years ago.

Buying on the never-never, they are banking on considerable future earnings once he stands down as PM. They will be able to generate up to £2,500 a week - possibly more if they cash in on their status - on the rental market but this will mean increased tax bills. The Blairs may find that it makes more sense for them to move into the property sooner rather than later, to avoid those tax bills.

At least it is unlikely to be as problematic as their last foray into the property market two years ago, which was a public relations disaster and ended in Cherie Blair making an emotional appeal for understanding. This time the Prime Minister's wife has been careful not to repeat the blunders that blighted the purchase of two flats in Bristol.

The fine Georgian houses of Connaught Square must first have made an impression on Cherie Blair during visits to her favourite clothes designer Eric Way, whose fitting rooms are sited just off the square.

So last year, Mrs Blair sent representatives to inquire about possible properties on the square. The response was encouraging. As one estate agent put it: "Just about every house in Connaught Square is on the market, it's really only a question of price." Few residents stay longer than five years and properties come on and off the market all the time. But it was not until early this year that the Blairs first appeared on the square for a personal viewing, an event that residents say went completely unnoticed.

The Blairs had come to see No 29, a large house in the middle of the west side, owned by an art historian, Roger Bevan, and his wife, Beverley. The house retains most of its Georgian features and has a grand wooden staircase that runs up and down the south side. It is built on five floors with five bedrooms and two bathrooms in about a total of 5,000sq ft.

But property experts say it suffers from having a small patio garden and offers only restricted views towards the rear.

It is not clear whether Roger Bevan ever knew the identity of the buyers of his home. Certainly the first tentative offers came from third parties. The Foxton's estate agent who negotiated the sale still insists she never knew who the buyers were. One of Mr Bevan's friends, who still lives on the square, said Mr Bevan was "puzzled" by this lack of disclosure but impressed with the speed at which bids were coming in. When he received an offer for a final price of £3.6m Mr Bevan had no hesitation in accepting it.

So when the Bevans were told that the buyers wanted to delay completion by three months they stuck with the Blairs and agreed to move out to Chelsea while the new owners carried out their own refurbishments over the summer. A Curtis Sloan estate agent who has been selling property on the square for 15 years said: "For what it is, it seems rather overvalued. I have got a similar house for sale on the east side that is having trouble fetching more than £3m. For what they paid they [the Blairs] could have got something much bigger and much more private in Holland Park or Notting Hill."

None of this will cause Mr and Mrs Bevan to lose any sleep. The property had no mortgage and the Bevans will have walked away with the full £3.6m. Mr Bevan, educated at Eton and Cambridge, is a respected historian and a member of the Tate's Patrons of New Art Jury. Former neighbours say he understood the significance of the square's listed architecture and was keen to ensure that the integrity of the Georgian houses was retained.

One member of the square's garden committee, of which Mr Bevan was once chairman, said: "The Blairs will be expected to contribute to the upkeep of the garden and paint their house once every four or five years. But apart from that there's not much contact." Estate agents describe the area close to Connaught Square as "downtown Kuwait City" because of the large Arab community living around the Edgware Road. Financial experts said that the Blairs' savings of £1m and combined earnings of £320,000 would have allowed them to arrange a buy-to-let mortgage where similarly wealthy couples may have failed: "The difference is that the Blairs could offer a first option on any future earnings that might include the memoirs of a former prime minister. That could be worth anything over £1m."

But according to property registration documents with the Land Registry in Harrow, the freehold title in the house is still retained by Mr Bevan.

Yesterday, though, the estate agents were also rubbing their hands with satisfaction. "Look, I've had several clients with houses on Connaught Square ringing up today telling me that they want to increase the value we put on their properties. That's got to be good for everyone's business."