The Crown Estate's chief executive has told MPs that the lease of Royal Lodge to Andrew Mountbatten-Windsor and his ability to sublet properties on the estate offered 'best value' when the arrangements were first put in place. Dan Labbad, chief executive of the Crown Estate, faced questions from the Public Accounts Committee (PAC) on Monday regarding the former duke's accommodation.
Lease and Subletting Details
Andrew, the late Queen's second son, received an undisclosed private income from subletting three cottages on his Royal Lodge estate while paying a peppercorn rent for over two decades, according to a National Audit Office (NAO) investigation last month. He paid £1 million for the lease and a further £7.5 million for refurbishments completed in 2005. The peppercorn rent was 'if demanded' per year.
Andrew was forced to vacate Royal Lodge and move to Marsh Farm on the King's Sandringham estate in Norfolk amid public outcry over the rent he paid, following his removal from public duties due to his links to paedophile Jeffrey Epstein.
Crown Estate Chief'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 that subletting income streams 'were taken into account in determining what best value was at the time.'
He stated that subletting is 'reasonably common' in the property industry for long leaseholds, and an independent valuation was undertaken when Andrew took over the lease more than 20 years ago. The governance process in 2003 considered the premium, refurbishment needs, and subleasing of cottages as part of the independent valuation.
When asked how much Andrew made from subletting, Mr Labbad said he did not have that information, noting it was a matter for the former duke as the tenant.
Royal Household's Role
James Chalmers, the King's keeper of the privy purse and treasurer, suggested the royal household could obtain the figure. He 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.'
PAC Chairman Sir Geoffrey Clifton-Brown told Mr Chalmers that the royal household could provide the amount in confidence to the NAO if they did not want the figure 'more widely shared.'
Accommodation for Princesses Beatrice and Eugenie
The NAO also found that the King foots the bill for Princess Beatrice and Princess Eugenie's accommodation in royal palaces, despite both being non-working royals. For several years, their adjusted rents were based on out-of-date open market valuations. Up until this year, Eugenie's rent for 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. Beatrice's rent was 60% of the 2020 market value from 2020-2021 and ranged from 62% to 68% between 2022-2025. Current rental rates are now 64% of a 2026 open market valuation for Eugenie, and 68% of a 2026 valuation for Beatrice.
Security and Rent Adjustments
Mr Chalmers told the committee that the royal household must be 'very, very careful' about who lives in 'very sensitive' parts of occupied royal palaces. The household has 255 properties across palaces including Buckingham Palace, Windsor Castle, Kensington Palace, and St James's Palace, with 216 behind the security cordon. Most are occupied by staff, with 12 other tenants.
He said rent is charged based on an adjusted market value due to the 'limited number of potential tenants' and the need to get 'best value for money for the taxpayer.' He added: 'We don't want to get ourselves into a position where we start charging more, or try to charge more, and then find that people leave the palaces and actually it'll hurt the public purse.'
Mr Chalmers acknowledged that some market valuations had been out of date but said rents had been increased year on year at a rate 'slightly above the rate at which the market had moved.' He expected the household to reflect on the NAO's scrutiny and review its valuation policy, suggesting valuations might be carried out every five or six years, as annual valuations would not offer value for money.
