The financial arrangement, which lasted more than 20 years, involved cottages on the Royal Lodge estate in Windsor Great Park.
The findings emerged in a new National Audit Office (NAO) report into the royal family’s residential property arrangements.
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.
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“We look forward to discussing the report further with the Public Accounts Committee in due course.”
The former Duke of York paid only a nominal peppercorn rent for the estate.
He was permitted to sublet up to three cottages under his lease agreement.
Norman Baker, a former Liberal Democrat minister and critic of royal finances, said the situation was “outrageous.”
He said: “It shows an absolute total contempt for the taxpayer, 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.”
A total of 12 properties were connected to the York family in 2025, either through the Crown Estate or the Royal Household.
Andrew Mountbatten-Windsor’s lease for the Royal Lodge, which began in 2003, required him to invest £7.5 million in renovations.
This reduced his capital premium payment to £1 million and secured him a peppercorn rent.
He vacated the estate earlier this year.
He is believed to now reside on the King’s private Sandringham estate.
The NAO report also revealed that King Charles III covers the rent for Princess Beatrice and Princess Eugenie’s royal residences.
Both are classified as non-working royals.
The King pays from the Privy Purse, funded by income from the Duchy of Lancaster.
The NAO said that the amount covers maintenance and operational costs already met by the Sovereign Grant.
This means there is no additional burden on public funds.
The Privy Purse also covers the rent for Prince and Princess Michael of Kent’s apartment at Kensington Palace.
Buckingham Palace responded to the report by welcoming its publication and emphasis on transparency.
A 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.”
For the Prince and Princess of Wales, William and Catherine, the NAO revealed that £396,993 was spent on refurbishing their new residence, Forest Lodge.
This was before they moved in last autumn.
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The cost exceeds the average property price in England, currently around £268,000.
The couple pays £307,200 per year under a 20-year lease.
They are responsible for all internal refurbishment expenses.
Other royal properties were also examined in the report.
The Duke and Duchess of Edinburgh, who reside at Bagshot Park, pay a nominal rent under a 150-year lease.
They paid a £5 million premium for the property in 2007.
At Thatched House Lodge in Richmond Park, Princess Alexandra pays £1,500 per year under her Crown Estate lease.
The Royal Household also manages 255 residential properties.
Of these, 145 are reserved for staff who are required to live on site.
These individuals pay 16.7 per cent of their gross pensionable salary toward accommodation costs.
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‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source www.impartialreporter.com ’
