Andrew Mountbatten-Windsor received private income from subletting three cottages on his Windsor Royal Lodge estate while paying a “peppercorn rent” to the crown estate, a report into royal property arrangements has revealed.
The National Audit Office (NAO) review also shows that King Charles pays an “adjusted” rent from his private Duchy of Lancaster income, below open market value, for his disgraced 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 with their three young children 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, the NAO said. They paid no upfront premium, and are responsible for internal refurbishments and alterations.
Details of the properties are revealed in the report, published on Friday, which will form the basis of the Commons public accounts committee’s inquiry into royal properties after the public outcry when it emerged in October Mountbatten-Windsor was paying a peppercorn rent on Royal Lodge, the Windsor mansion from which he was eventually evicted by Charles.
The NAO found rent and lease arrangements for the royals differed depending on why the accommodation was required and whether the property was managed by the crown estate – a self-funding public corporation managing assets on behalf of the crown – 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, the NAO said.
Charles also pays rent for Prince and Princess Michael of Kent’s Kensington Palace apartment, although there was no record of valuation of that lease prior to 2026
Mountbatten-Windsor, now evicted to Marsh Farm on the Sandringham Estate, Norfolk, had a lease that permitted subletting, though it was not known how much he received through this.
He paid a £1m premium and £7.5m 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, the report said. 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 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”.
The Duke and Duchess of Edinburgh paid a £5m 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 £1.38m 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.
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.”
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