A National Audit Office (NAO) report into royal property arrangements has revealed that Andrew Mountbatten-Windsor received private income from subletting three cottages on his Windsor Royal Lodge estate while paying a nominal "peppercorn rent" to the crown estate. The report, published on Friday, will form the basis of the Commons public accounts committee's inquiry into royal properties following public outcry in October when it emerged Mountbatten-Windsor was paying a peppercorn rent on Royal Lodge, the Windsor mansion from which he was eventually evicted by King Charles.
Key Findings of the NAO Report
The NAO review also shows that King Charles pays an "adjusted" rent from his private Duchy of Lancaster income, below open market value, for his brother's non-working royal daughters, Princesses Beatrice and Eugenie, to live in royal palaces. Meanwhile, the Prince and Princess of Wales's Forest Lodge home in Windsor underwent £400,000 repairs carried out by the crown estate before the couple moved in last year. William and Catherine took out a 20-year lease in July on the Grade II-listed Georgian house, with gardens, paddock, a barn and three cottages set within 7.4 hectares, and pay £307,200 rent a year, reviewed every five years. They paid no upfront premium and are responsible for internal refurbishments and alterations.
Rent and Lease Arrangements
The NAO found that rent and lease arrangements for royals differed depending on why the accommodation was required and whether the property was managed by the crown estate or the royal household. For those managed by the royal household, "adjusted rent" was typically 60% of the open market valuation because the properties are within a secure cordoned area requiring tenants to have security vetting. The rent for Beatrice's St James's Palace apartment is 68% of market value, while Eugenie's Kensington Palace cottage is 64%. Eugenie's rent was 50% of the 2018 open market value from 2020 to 2021, and ranged from 55% in 2022 to 63% in 2025, while Beatrice's was 60% of the 2020 market value from 2020-2021 and ranged from 62% to 68% between 2022 and 2025.
Mountbatten-Windsor's Arrangements
Mountbatten-Windsor, now evicted to Marsh Farm on the Sandringham Estate in Norfolk, had a lease that permitted subletting, though it was not known how much he received through this. He paid a £1 million premium and £7.5 million on refurbishment of Royal Lodge under the 75-year lease in 2003, and could be entitled to between £301,967.66 and £488,342.21 compensation by surrendering it early. However, the crown estate has previously said it is likely he will not be owed any compensation once dilapidations are taken into account. Sources suggested Mountbatten-Windsor's subletting did not generate a profit and that the rent was set at a rate to cover only maintenance and running costs for staff living there. However, no figures, such as repair and household costs versus rental income, or copies of the rental agreements, have been made public.
Public Money and Sovereign Grant
Public money through the sovereign grant is used for the maintenance and operational costs of the occupied royal palaces. But sources suggested the adjusted rents paid by the king for Beatrice and Eugenie's palace residences covered the costs met by the sovereign grant on those properties and therefore there was no additional cost to the grant. Norman Baker, a former Liberal Democrat minister, said the arrangements for Mountbatten-Windsor added "insult to injury … not only that Andrew was able to have a peppercorn rent for a gigantic property, but then to make potentially millions on the side from subletting properties. The money should have gone to the crown estate, not into [his] pockets."
Other Royal Property Leases
The Duke and Duchess of Edinburgh paid a £5 million premium for Bagshot Park, their home on the Windsor estate. A new lease granted in August 2007 replaced the previous lease, with Prince Edward paying £1.38 million against the original 1998 lease. The couple pay a peppercorn rent. They also generated income by renting out the stable block up to 2020, the report said. Seven members of the royal family lease five properties from the crown estate. The lease terms vary, and were agreed at the open market value at the time, with the crown estate seeking independent professional advice on the financial terms, the report said. The royal household provides 11 working royals, including Charles and Camilla, with seven residences within the occupied royal palaces at no cost in exchange for their official duties.
Official Responses
The report states: "Generally, we found [the crown estate] applied standard practices across the leases we examined and in line with its processes. Where we found differences, these related to specific terms within lease agreements for the same lease type. Each lease was agreed at different points in time over a 50-year period, so some variation in practice and outcomes is to be expected." A spokesperson for the crown estate said: "The crown estate welcomes the National Audit Office’s review, which confirms its leases with members of the royal family were agreed in line with independent, professional advice and open market valuations. We look forward to discussing the report further with the public accounts committee in due course." A Buckingham Palace spokesperson said: "We are grateful to the National Audit Office for this report, which is in line with the royal household’s commitment to transparency. We hope that the findings will help correct, clarify or contextualise a number of points regarding royal properties. As the report notes, arrangements for properties managed by the royal household vary based on a number of factors to ensure residences are filled appropriately, depending on their location, tenants and purpose."
