The Crown Estate's chief executive told a Commons committee that Andrew Mountbatten-Windsor's subletting of three cottages on the Royal Lodge estate offered “best value for money” at the time the lease was agreed. Dan Labbad, chief executive of the Crown Estate, appeared before the Public Accounts Committee (PAC) on Monday as part of an inquiry into the management and governance of the Crown Estate and associated properties.
Background on the Lease and Subletting
Andrew, who was stripped of his titles over his links to convicted paedophile Jeffrey Epstein, paid a peppercorn rent of £1 per year “if demanded” for more than two decades after paying £1 million for the lease in 2003. He was also required to pay £7.5 million for refurbishments completed in 2005. A National Audit Office (NAO) investigation in June revealed that Andrew received an undisclosed private income from subletting three cottages on his Royal Lodge estate while paying the nominal rent. He was forced to vacate Royal Lodge and move into Marsh Farm on the King's Sandringham estate in Norfolk amid public outcry over the rent arrangement.
Crown Estate Chief Executive's Testimony
Mr Labbad told the PAC: “In the case of Royal Lodge, the £7.5 million in refurbishment costs, we were able to then take that money that we would otherwise have to spend, and invest in other things.” He added of the subletting: “Those potential income streams were taken into account in determining what best value was at the time.” He insisted that subletting was “reasonably common” in the property industry for long leaseholds, and an independent valuation was undertaken during the governance process when Andrew took over the estate's lease more than 20 years ago. “The governance process that led to the arrangements at Royal Lodge in 2003 was such that a whole range of things were looked at – the premium, the refurbishment needs that would have otherwise been a Crown Estate cost, and a whole host of other elements… Within that, subleasing of the cottages was part of the independent valuation that informed both the consideration and the value for money requirements being satisfied,” he said.
Questioning on Subletting Income
When questioned about how much Andrew made from the subletting, Mr Labbad said he did not have that information and that it was a matter for the former duke as the tenant. However, James Chalmers, the King's keeper of the privy purse and treasurer, who also appeared as a witness, suggested the Royal Household would be able to obtain the figure. Mr Chalmers said: “What I can say is the role we played with the NAO report, which we can play here, was we gathered the information from the other households, and I believe if the request were made for that information, we could provide it to the National Audit Office and therefore to the committee … We can get it.” PAC Chairman Sir Geoffrey Clifton-Brown told Mr Chalmers it could be arranged for the Royal Household to provide the amount in confidence to the NAO if they did not want the figure to be “more widely shared.”
Other Findings: Princesses' Accommodation Rents
Other findings by the NAO included the revelation that the King foots the bill for Princess Beatrice and Princess Eugenie's accommodation in royal palaces despite both being non-working royals. For a number of years, their adjusted rents – reduced because the royal household properties require tenants with security clearance – were based on out-of-date open market valuations. Up until this year, Eugenie's rent of Ivy Cottage at Kensington Palace was based on a 2018 valuation and Beatrice's apartment in St James's Palace on a 2020 valuation. 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 rent on Beatrice's was 60% of the 2020 market value from 2020-2021 and ranged from 62% to 68% between 2022-2025, the NAO said. The current rental rates are now 64% of a 2026 open market valuation for Eugenie, and 68% of a 2026 valuation for Beatrice.
Royal Household's Rental Policy
Mr Chalmers told the committee that the royal household had to be “very, very careful” who they allowed to live in “very sensitive” parts of the occupied royal palaces. The household has 255 properties across the palaces, including at Buckingham Palace, Windsor Castle, Kensington Palace and James's Palace, with 216 behind the security cordon. Most of these are occupied by staff, as well as 12 other tenants. Mr Chalmers said the household charged rent to the 12 tenants based on an adjusted market value because of the “limited number of potential tenants, but also that we want to get the best value for money we can for the taxpayer.” He said that although some market valuations had previously been out of date, they had been increasing the rents year on year to a rate “slightly above the rate at which the market had moved.” He said he expected the household to react and reflect on the NAO's scrutiny and look at its valuation policy, but suggested valuations might be carried out every five or six years because doing so every year would not offer value for money.
