Andrew made private income from subletting Royal Lodge properties while paying peppercorn rent

A National Audit Office investigation has revealed that Andrew Mountbatten-Windsor collected undisclosed private income by subletting three cottages on the Royal Lodge estate throughout a period spanning more than twenty years, during which he paid only a peppercorn rent for the Crown Estate property.

The public spending watchdog published its findings following ongoing controversy surrounding the former duke's lease arrangements at the royal residence.

The report also uncovered that King Charles covers the accommodation costs for Princess Beatrice and Princess Eugenie, despite neither of his nieces carrying out official royal duties.

Additionally, the NAO found that adjusted rents for Royal Household properties requiring tenants with security clearance had been calculated using outdated market valuations for several years.

The findings will now form the basis of a Public Accounts Committee inquiry into royal property arrangements.

Andrew Mountbatten-Windsor and Royal Lodge

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Andrew's lease was negotiated in 2003 with an agreement that he would invest £7.5 million in renovating the property, which the Crown Estate has confirmed he completed.

In exchange for this substantial restoration commitment, his upfront capital premium was reduced to £1 million, with only a peppercorn rent required thereafter.

Under the terms of this arrangement, he was permitted to sublet up to three of the eight Main Gate Cottages on the estate.

The NAO did not disclose how much income Andrew generated through these subletting arrangements, stating that such figures were private, nor did it confirm whether the properties were continuously occupied by tenants.

A Buckingham Palace insider stated that the subletting arrangements involving properties on the Royal Lodge estate were private agreements between the leaseholder (Andrew) and tenants of the sublet.

Andrew’s subletting activities concluded in April 2026.

The watchdog noted that Andrew's lease was unique among those it examined in containing an early surrender clause, with the agreement running until October this year.

Andrew vacated Royal Lodge earlier this year and relocated to the King's private Sandringham estate in Norfolk.

Whether he will receive any compensation for relinquishing his lease remains uncertain as the final sum depends on the condition of the property. It is most likely that the remedial works required will outweigh any compensation due.

The Crown Estate is currently awaiting an assessment of the property's final state before determining any payment, which could range from £301,967 to £488,342 if no repairs are required.

Princess Beatrice and Princess Eugenie's rental agreements

The NAO report disclosed that King Charles personally covers the rent for both Beatrice and Eugenie's palace residences, drawing the funds from the Privy Purse, which derives from his private Duchy of Lancaster income.

Beatrice, 37, occupies an apartment in St James's Palace, while her younger sister Eugenie, 36, resides at Ivy Cottage within Kensington Palace.

Until this year, the rents charged for these properties relied on significantly outdated market assessments.

Eugenie's accommodation costs were based on a valuation from 2018, whilst Beatrice's rental figure stemmed from a 2020 assessment.

The Royal Household's standard policy aims to charge approximately 60 per cent of open market value for such properties, though the NAO discovered that actual rates applied were inconsistent and did not typically meet this benchmark.

The exact sums the King pays for his nieces' accommodation were not revealed, with the watchdog deeming these amounts private.

Between 2020 and 2021, Eugenie's rent stood at half the 2018 market value, subsequently rising to between 55 and 63 per cent through to 2025.

Beatrice's payments followed a similar pattern, starting at 60 per cent of the 2020 valuation before climbing to between 62 and 68 per cent over the same period.

Following updated assessments this year, Eugenie now pays 64 per cent of a current market valuation, with Beatrice's rate set at 68 per cent.

Neither princess undertakes official royal engagements, with both pursuing their own careers.

The reduced rental rates applied to these palace properties reflect the requirement that tenants must hold security clearance, a factor that limits the potential tenant pool and justifies charging below full market rates.

The Prince and Princess of Wales's Forest Lodge deal

The Crown Estate spent nearly £400,000 refurbishing Forest Lodge and its accompanying buildings before the Prince and Princess of Wales took up residence last autumn.

Total renovation costs reached £396,993, a figure exceeding the average English property value of approximately £268,000 according to the UK House Price Index.

The bulk of expenditure, some £213,353, went towards the main house and surrounding grounds, covering heating and plumbing systems, structural repairs to ceilings, floors and staircases, fire safety equipment, brickwork, boilers, and stabilising external walls.

Two staff cottages on the site also required significant work, with No 2 Stable Cottage costing £48,575 and No 3 Stable Cottage requiring £90,626. The barn received £44,439 in repairs.

As landlord, the Crown Estate bore responsibility for these repairs because William and Catherine signed a short-term lease.

William and Catherine pay £307,200 annually for the Grade II listed Georgian property, avoiding any accusations of peppercorn rent arrangements.

Their 20-year short-term lease requires quarterly payments of £76,800, with no upfront deposit demanded because the couple are funding all internal refurbishment work themselves.

The tenancy encompasses the main house, gardens, a paddock spanning 7.4 hectares, a barn, and three Stables Cottages.

Rent reviews will occur every five years, linked to the Consumer Price Index, with increases capped between 3 and 5 per cent.

The lease includes provisions allowing the couple to transfer the agreement to any or all of their children, Prince George, Princess Charlotte and Prince Louis, in future.

Prince Edward and Sophie's Bagshot Park terms

The Duke and Duchess of Edinburgh secured a 150-year lease on Bagshot Park in Surrey in 2007, paying a £5 million premium that entitled them to peppercorn rent thereafter.

Prince Edward's company Eclipse Nominees Limited is listed as the official leaseholder for the property.

Prior to this arrangement, the couple held an earlier lease from 1998 to 2007, during which they committed to spending £1.38 million on restoration work.

Like Andrew, Edward and Sophie were permitted to sublet portions of their estate under the lease terms.

The couple generated private income by renting out the stable complex at Bagshot Park to a third party, an arrangement that continued until 2020.

Prince and Princess Michael of Kent's Kensington Palace accommodation

Prince and Princess Michael of Kent also have their Kensington Palace accommodation costs covered by the King from the Privy Purse, the NAO revealed.

The couple sparked controversy in 2002 when it emerged they were paying just £69 weekly in peppercorn rent for the grand Apartment 10, despite not performing official royal duties.

Commons Public Accounts Committee members demanded full rent payments at the time, though the couple maintained that Queen Elizabeth II had gifted them use of the palace as a wedding present.

The late Queen subsequently agreed to pay £120,000 annually in commercial rent on their behalf, an arrangement that continued until 2009 when they were expected to cover the costs themselves.

The NAO report now shows the King has resumed paying their rent, though precisely when this arrangement began after 2009 remains unclear.

Their current rent has risen 34 per cent between 2020 and 2026, now standing at 63 per cent of a 2026 market valuation.

The National Audit Office's Overview

The NAO found that seven members of the Royal Family occupy five Crown Estate properties, with lease terms varying according to factors such as upfront premium payments, refurbishment commitments and any early surrender provisions.

The Royal Household provides eleven working members of the Royal Family with seven residences within occupied royal palaces at no charge, in exchange for their performance of official duties.

These include William and Catherine at Apartment 1A in Kensington Palace, the Duke and Duchess of Gloucester, the Duke of Kent, the Princess Royal, the Duke and Duchess of Edinburgh, Princess Alexandra, and the King and Queen.

A further 21 post-holders, comprising 17 military knights with ceremonial responsibilities, three military secondees and a clergy member, also receive accommodation without charge.

The Royal Household oversees 255 residential properties in total, with 145 occupied by staff required to live on site, who contribute 16.7 per cent of their gross pensionable salary towards housing costs.

A Crown Estate spokesperson told GB News: "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."

While a Buckingham Palace spokesperson told The People’s Channel: “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.”

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