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A prominent Tory MEP has been given a holiday home for 70p a year by the unrecognised Turkish Republic of Northern Cyprus for the next 49 years.

James Corrie, Tory MEP for the West Midlands, was given the expropriated property by the ministerial council of the republic on Christmas Day, in advance of any peace settlement which could end the dispute which has divided the island of Cyprus since 1974.

Mr Corrie, who is chair of the EU-Africa Caribbean and Pacific joint parliamentary group, admits he negotiated the deal with the government as "leverage" to get back another property he owned should the Northern Cyprus government be replaced following a peace deal.

Mr Corrie bought two homes in the republic after the Turks annexed the northern part of the island. One home was in Mirthu, and a second house which he claims cost £60,000 to build, was confiscated by the Turkish army two years ago as it was within the precincts of a new army camp.

Now he has been given a another property near the holiday resort of Kyrenia.

Last night in a statement to the Guardian, Mr Corrie said: "My lawyer was advised that if we did not take it there would be no leverage to get my own house back when a peace deal was agreed. We therefore agreed that he would accept this on the understanding that when a settlement was agreed I would get my own house back and the new house would be returned to the original owner."

The document for the deal, which has been published by the government, shows that it is being given on a lease of one US dollar a year.

Mary Honeyball, Labour MEP for London, and a member of the joint parliamentary committee for the European Union and Cyprus, last night called for an inquiry into the affair. "This seems to be an extraordinary deal negotiated at a very delicate time."