The Crown Estate's chief executive has told MPs that the Duke of York's lease of Royal Lodge and his ability to sublet properties on the estate represented "best value" when the arrangements were first put in place.
MPs Question Crown Estate on Royal Lodge Arrangements
Dan Labbad, chief executive of the Crown Estate, faced questions from the Public Accounts Committee (PAC) on Monday regarding the former duke's accommodation. The hearing was part of the PAC's inquiry into the management and governance of the Crown Estate and associated properties.
Andrew Mountbatten-Windsor, 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 more than two decades, a National Audit Office investigation revealed last month.
Leasehold Agreement Details
The leasehold agreement showed Andrew paid £1 million for the lease and since then paid "one peppercorn" of rent "if demanded" per year. He was also required to pay a further £7.5 million for refurbishments completed in 2005.
Mr Labbad told the committee: "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."
Subletting Considered in Valuation
Regarding the subletting, Mr Labbad said: "Those potential income streams were taken into account in determining what best value was at the time." He insisted 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 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…" Mr Labbad said. "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."
Andrew's Move to Sandringham
The payments came to light after Andrew, who was stripped of his titles over his links to paedophile Jeffrey Epstein, was forced to vacate his home and move into Marsh Farm on the King's Sandringham estate in Norfolk, amid public outcry about the rent he paid.
Royal Household Could Provide Subletting Income Figure
Mr Labbad was questioned on how much Andrew made from the subletting, but he 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 was also appearing 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."
Chairman of the PAC 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".
