Oxford West and Abingdon MP Evan Harris has defended his expenses claim to extend the lease for his second home and make it more valuable.

Dr Harris was allowed by the parliamentary fees office to claim towards the £40,000 cost of extending the lease on a flat he had near Westminster — thus increasing the overall value of the property.

It led to his claim for mortgage interest payments under the controversial second home allowance rising by about £150 a month, he said.

Dr Harris subsequently sold the flat to his parents for £200,000 more than he paid for it – but last night the Liberal Democrat MP said he had acted in the best interest of the taxpayer.

Dr Harris last week told the Oxford Mail that he would be paying back any capital gains he had made on taxpayer-financed properties when his parliamentary career ended.

Yesterday he said he was warned during 2005-06 that the value of the flat was decreasing because the leasehold was running out.

He went to the fees office, which passed the purchase, so he increased his mortgage and extended the lease.

Dr Harris said: “Any increased value of my second home financed by the taxpayer will be passed over to the taxpayer when I no longer need it.

“To reject or ignore the legal advice and not extend the lease would also have short-changed the taxpayer as the value of the property would have fallen year-on-year dramatically. I believe the use of the allowance was entirely within not just the wording of the rules but the spirit as well, and indeed in the best interests of the taxpayer who retain a stake in the value of my second home.”

Last year, the Liberal Democrat MP sold the one-bedroom flat in Westminster to his parents Frank and Brenda for £350,000 after getting an independent external valuation.

Dr Harris has now bought a new flat near his old one.

Dr Harris said he had not identified any allowances he claimed which were “inappropriate”. He declined to reveal the cost of his new flat but said that since the move, there had been a reduction in his claims, which were two-thirds of the maximum in 2008-2009.

The Conservative party’s scrutiny panel is to look at Witney MP and party leader David Cameron’s repayment of £75,000 off his London home’s mortgage when the taxpayer was paying towards his West Oxfordshire house.

Mr Cameron was criticised at the weekend for taking out a £350,000 mortgage on his house in Dean, and nominating it as his second home, which meant he too could claim towards the interest, and then a few months later paying off his London address’ mortgage.

The Tories have denied that if he had paid £75,000 off the Dean property that it would have seen a drop in the amount Mr Cameron could claim for that mortgage.

Mr Cameron said he believed his claims had been “reasonable”.