Report Reveals That King Pays Palace Rents for Non-Working Royals and Andrew Mountbatten-Windsor Made Income Subletting Cottages
A National Audit Office (NAO) report into royal property arrangements has revealed that King Charles pays the subsidised rent for his nieces, Princesses Beatrice and Eugenie, to live in royal palaces. The investigation, which is the first comprehensive review of its kind in two decades, also disclosed that Andrew Mountbatten-Windsor pocketed undisclosed private income by subletting properties on his former estate despite paying a "peppercorn rent" himself.
The publication of the watchdog's findings on Friday has prompted the House of Commons public accounts committee to launch an inquiry into royal housing agreements later this year.
The report sheds light on the accommodation arrangements of the King’s nieces, Princess Beatrice and Princess Eugenie. As non-working royals who hold private jobs, the sisters do not perform official duties but occupy central London apartments maintained by public funding through the Sovereign Grant.
According to the NAO, their rent is paid directly to the Royal Household by the King using the "privy purse", which is the monarch's personal income derived from the Duchy of Lancaster. The King also pays the rent for Prince and Princess Michael of Kent’s apartment in Kensington Palace.
For properties managed by the Royal Household, rent is typically set at an "adjusted" rate of 60% of open market value because they sit within secure cordoned areas requiring strict security vetting. The audit detailed specific fluctuations in these figures:
- Princess Beatrice (St James's Palace): Rent was set at 60% of the 2020 market value from 2020 to 2021, later ranging between 62% and 68% from 2022 to 2025.
- Princess Eugenie (Kensington Palace): Rent stood at 50% of the 2018 market value across 2020 and 2021, moving between 55% in 2022 and 63% in 2025.
Palace sources emphasized that these adjusted rents cover any costs met by public funds, meaning the arrangements incur no additional expense for the taxpayer. However, critics have voiced strong objections.
Baroness Margaret Hodge, former chair of the Public Accounts Committee, questioned the ethics of the setup, asking: "Now, is it appropriate for non-working royals to be subsidised by the taxpayer from a fund that belongs to the taxpayer?"
She added: "The Crown Estate is our money, it's taxpayers' money, it's not theirs, and whoever runs that has to always ensure the taxpayers' interest."
Andrew Mountbatten-Windsor Sublets Cottages at Royal Lodge
The NAO review was prompted by intense public scrutiny surrounding Andrew Mountbatten-Windsor's 75-year lease of Royal Lodge in Windsor, a 30-room mansion which he was evicted from by the King earlier this year. The audit revealed that his leasing agreement permitted him to rent out three of the eight cottages on the Royal Lodge estate. For over 20 years, he sub-let these properties and kept the rental income for himself rather than passing it to the Crown Estate, which returns its profits to the Treasury.
While all tenants had vacated the cottages by April, the NAO noted it was unable to establish exactly how much private income he secured or who the tenants were. Palace sources suggested the cottages were let to staff or retired staff at rates intended only to offset maintenance and operational costs, though no formal accounts or lease agreements have been made public.
Former Home Office minister Norman Baker called the discovery "outrageous", stating:
"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."
Mountbatten-Windsor, who relocated to the Sandringham Estate, retains the lease on Royal Lodge until October 2026. The report noted he could technically seek between £301,967.66 and £488,342.21 in compensation for surrendering the lease early, though the Crown Estate indicates he is likely to receive nothing once the property's dilapidations are calculated.
The Duke and Duchess of Edinburgh hold a similar agreement at Bagshot Park in Surrey, where they pay a peppercorn rent and generated private income by leasing out the estate's stable block to a third party until 2020.
The review also provided the financial framework for Forest Lodge, the Windsor estate home where the Prince and Princess of Wales moved last year. The audit revealed that the Crown Estate paid £396,993 for landlord-related repairs to the Grade II-listed Georgian house, its grounds, a barn, and two of its three staff cottages before the family took residence.
Prince William and Catherine signed a 20-year lease on the property. They paid no upfront premium or deposit but are fully responsible for all internal modifications and refurbishments. The couple pays £307,200 in rent per year, broken down into quarterly payments of £76,800, which faces a review every five years to match the consumer prices index.
While 11 working royals receive palace accommodation free of charge in exchange for official duties, the subsidization of non-working family members has drawn sharp political backlash amid widespread housing struggles across the UK.
The Crown Estate welcomed the report, noting it confirms its royal leases "were agreed in line with independent, professional advice and open market valuations."
A Buckingham Palace spokesperson stated that the report aligns with their "commitment to transparency," adding: "We hope that the findings will help correct, clarify or contextualise a number of points regarding royal properties."
The spokesperson concluded: "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."
