Having thrown Tom over for Lou, Maggie is devastated when a letter arrives from Scotland to say that Lou is now dating his convalescent nurse.

The last member of the family for whom she once worked has died, leaving her an old car. With Frieda to supervise Nan drives Maggie, Stanley and Harvey back to the house where she worked, where Harvey and Frieda kiss and Harvey learns a secret from Nan's past. However the car breaks down so Nan sells it. Rita agrees to stay friends with Leo and buys into a hair-dressing salon whilst Stanley wins a school essay competition with a story based on Nan's little secret.

Christmas is coming, and Harvey clears the air with Ryder whilst Rita takes over the running of the salon and Maggie gets back with Tom, to the dismay of her annoying friend Veronica.

The Gottliebs' teen-aged compatriot Yossela moves into the house but he is deeply disturbed by his wartime experiences and behaves erratically, slashing a portrait Frieda is painting of Harvey as he is jealous of their growing relationship. Ultimately, with Tom's help, he is put onto a ship bound for Palestine and, with peace restored, Nan kisses Erich under the mistletoe.