Andrew Mountbatten-Windsor’s long-running arrangements at Royal Lodge have come under fresh scrutiny after a National Audit Office report exposed how the former duke was able to generate income from the estate while paying only a nominal rent.
The watchdog found that Andrew was permitted to sublet up to three cottages on the Royal Lodge grounds while occupying the main residence under a peppercorn rent agreement. The arrangement, negotiated in 2003, required an upfront £1million payment and a £7.5million refurbishment commitment, in exchange for what effectively became a long-term, heavily subsidised lease on one of the Crown Estate’s most valuable properties.
While the Crown Estate confirmed that the refurbishment works were completed, the NAO noted that the income generated from subletting was not disclosed, and could not be independently verified. Whether the cottages were continuously occupied also remains unclear.
The findings are likely to intensify criticism of the opaque and inconsistent way royal property arrangements are structured, with the report highlighting outdated valuation methods, uneven rent calculations and a system that allows significant discretion in how much members of the Royal Family ultimately pay.
Andrew’s lease was described as unusual even by Crown Estate standards, containing provisions that allowed early surrender and enabling him to exit the agreement ahead of its 2026 expiry. He vacated Royal Lodge earlier this year and has since relocated to the King’s Sandringham estate, though it remains uncertain whether any compensation will be paid for relinquishing the lease.
Any final payout, the NAO said, will depend on the condition of the property, with estimates ranging from just over £300,000 to nearly £490,000 if no remedial work is required. In practice, officials suggest refurbishment costs are likely to outweigh any return.
But the report goes further than Andrew alone.
It reveals that King Charles personally covers the accommodation costs of Princess Beatrice and Princess Eugenie from the Privy Purse, despite neither undertaking official royal duties. Their rents, the NAO found, have been calculated using outdated valuations for years, with adjustments lagging behind market assessments and only gradually moving towards the Crown Estate’s own target of roughly 60 per cent of open market value.
Beatrice lives in St James’s Palace and Eugenie in Ivy Cottage at Kensington Palace, both within the wider royal estate network. Although rents are now closer to updated valuations, the report highlights long periods where payments fell below expected benchmarks.
Elsewhere, similar arrangements persist across the wider royal housing system. The Duke and Duchess of Edinburgh continue to benefit from a long lease at Bagshot Park secured after a substantial upfront payment, while other senior royals occupy Crown Estate properties at preferential rates linked to duties, security requirements and historic agreements.
The NAO identified 255 residential properties within the royal portfolio, with a complex mix of free accommodation for working royals, subsidised leases, staff housing contributions and privately funded refurbishments. It warned that inconsistent valuation practices and fragmented oversight make it difficult to assess whether the system delivers value for money.
The findings are set to form the basis of a wider Public Accounts Committee inquiry, which will now examine whether royal property arrangements have drifted beyond modern accountability standards.
For critics, the report reinforces long-standing concerns that parts of the royal housing system operate on assumptions and legacy deals that are increasingly difficult to justify in a transparent, publicly scrutinised era.
For Buckingham Palace, it raises a more uncomfortable question: how many of these arrangements still reflect duty—and how many simply reflect history.
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