Friday June 5th 2026
National Audit Scotland
Written by Midlothian View Reporter, Liam Eunson
The rent and lease arrangements for members of the Royal Family differ depending on why the accommodation is required and whether the property is managed by The Crown Estate (TCE) or The Royal Household (the Household), according to a new National Audit Office (NAO) report.
Seven members of the Royal Family occupy five properties leased from TCE. Of these, three properties are leased under the names of individual Royals, one is leased to a company, and the other is co-leased to a Royal and a trust. Two additional properties are leased to members of the Royal Family for use by their staff.
TCE has established processes for agreeing leases,5 which include seeking independent valuation advice. It uses this information to negotiate final lease terms, which vary depending on the circumstances of each individual property and market conditions.
The differences in lease terms include the value of upfront premium payments; subletting rights; the assignability of leases; refurbishment and renovation costs; and early surrender clauses.
The leases on Royal Lodge, Bagshot Park and Thatched House Lodge have sub-letting provisions. In the case of Royal Lodge, three cottages on the estate were sublet with income generated payable to Andrew Mountbatten-Windsor. These properties have been vacant since April 2026.
The Royal Lodge lease has an early surrender clause and possible compensation. This means Andrew Mountbatten-Windsor, who requested early surrender of the property’s lease on 30 October 2025, could be entitled to compensation payment of £301,967.66, assuming the full 12-month notice period is served and depending on dilapidation costs at handover which, at the time of publication, had not yet been assessed.
The Household, which manages the land and buildings in the occupied royal palaces, has policies setting out the amount of rent payable for use of space and facilities within the estate. In 2024-25, it generated £3.6 million in rental income by charging for non-official use of residential properties.
The rent due depends on factors including the tenant’s role within the Royal Family or Household, whether the accommodation is required for official duties, and whether it is within a secure location.
Eleven members of the Royal Family have seven residences within St James’s Palace and Kensington Palace and use these at no cost in exchange for carrying out official duties.
Three properties in the occupied royal palaces are rented to non-working members of the Royal Family. In these instances, Household policy is to charge an adjusted rent of typically 60% of the open market value. However, this policy has not always been strictly followed. These three rents are currently paid by the Privy Purse.
The Household also generates income from a further 145 properties used by its staff, who are required to live within occupied royal palaces and contribute a proportion of their salaries towards accommodation costs. In 2025-26, this was 16.7% of gross pensionable salary.
The Monarch is permitted to move properties between TCE and the Household through three legislative acts, often referred to as ‘grace and favour’ arrangements. Contrary to the commonly held definition, these properties are not provided free of charge to those occupying them. Instead, charges for occupying these properties vary depending on several factors, including who the tenant is and the role they perform.
Currently, the Household manages 52 ‘grace and favour’ properties that were previously part of TCE – typically flats and cottages located in Windsor used by Household staff and pensioners.
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