MPs have called on the Crown Estate to prohibit subletting as part of recommendations from an inquiry into Andrew Mountbatten-Windsor's Royal Lodge lease, after it emerged he received income from renting out cottages. The Public Accounts Committee (PAC) concluded that the Crown Estate "did not identify specific lessons from the Royal Lodge lease arrangement" and was "reluctant to discuss specifics on how it is applying lessons learned from this process or discuss what they will do differently in the future, due to the Royal Lodge lease being a product of its time".
Subletting and rent recommendations
The committee recommended that for all future leases, the Crown Estate adopt a standard provision prohibiting subletting unless prior permission is obtained from the landlord. The report said: "There should be a standard provision in leases that prohibits sub-letting, unless the landlord's prior permission is obtained. That permission should not be unreasonably withheld, and we would expect the Crown Estate to obtain relevant financial details."
The PAC also called on the Royal Household to implement a consistent policy for setting rents in its residential properties. This followed findings that Princess Beatrice and Princess Eugenie had adjusted rents, paid for by the King, based on out-of-date open-market valuations for several years.
Details of the Royal Lodge arrangement
Earlier this year, it was found that Andrew received an undisclosed income from subletting three cottages in the grounds of Royal Lodge, a Crown Estate property, while paying a peppercorn rent for more than two decades. The former duke of York sublet one cottage at below market rate to an in-situ tenant who worked for the Royal Family for most of the 22-year tenancy. From late 2021, for an undisclosed period of less than a year, he sublet three cottages in total, generating a combined income, before maintenance and expenses, of just over £2,000 a month.
Andrew officially surrendered his lease on Royal Lodge last month. The King privately paid the mansion's £1.5 million repair and restoration costs to the Crown Estate after £302,000 compensation was deducted from the £1.8 million bill for Andrew giving up the lease early. The future use of Royal Lodge has yet to be decided, and the PAC said the Crown Estate will "need to consider the lessons learned to inform future use and leasing arrangements for Royal Lodge".
Royal Household rent policy
The committee's recommendations also covered the Royal Household after a National Audit Office investigation found outdated residential property valuations led to inconsistencies in rent charged for non-working members of the Royal Family. The report stated that although the Household had reviewed and increased rents over the past six years, it did so without a clearly defined policy on how frequently independent valuations should be obtained or how and when rents should be reviewed. It recommended implementing a consistent policy, including defined intervals for independent valuations and rent reviews.
The Household is responsible for 255 residential properties across the occupied royal palaces estate, including those used by Beatrice, Eugenie, and the Prince and Princess Michael of Kent. 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 was based on a 2020 valuation. Current rental rates are 64% of the 2026 open-market valuation for Eugenie and 68% for Beatrice.
A Crown Estate spokesperson said: "The PAC report is an important part of our accountability to Parliament. We are considering its findings and recommendations and will respond to the Committee in due course." A Buckingham Palace spokesperson said: "We are grateful to the Public Accounts Committee and its members for their work on this inquiry. We acknowledge the Committee's recommendation and will carefully consider it as part of our commitment to continuous improvement."
