Crown Estate must look at lessons learned on Andrew’s Royal Lodge lease, MPs say

The Crown Estate should prohibit sub-letting as standard in the wake of Andrew Mountbatten-Windsor receiving an income for renting out cottages on his former Royal Lodge estate, a cross-party committee of MPs has warned.

The Public Accounts Committee (PAC) has issued a series of recommendations as part of its inquiry into both the Estate, and properties managed by the Royal Household.

The committee concluded that the Crown Estate “did not identify specific lessons from the Royal Lodge lease arrangement”.

The former duke of York lived at Royal Lodge for two decades (Jordan Pettitt/PA)

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It described the Estate as “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”.

The mansion in Windsor Great Park was then the only property occupied by a member of the royal family with an early surrender clause.

The MPs also called for the Royal Household to implement a consistent policy for setting rent in its residential properties after Princess Beatrice and Princess Eugenie had adjusted rents, paid for by the King, based on out-of-date open market valuations for a number of years.

And the influential committee criticised the Crown Estate, whose profits go to the Treasury to be used for public spending, for not clearly demonstrating how it balances its financial objectives with its environmental and social ones.

It flagged the Estate’s administration costs had significantly jumped by 129% since 2020-21 to 2025-26, with the chief executive’s salary increasing by 106% over the same period, and recommended it should set out a plan detailing how it will manage its spending.

The King pays for Beatrice and Eugenie’s rent of properties in royal palaces (Aaron Chown/PA)

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Earlier this year, it was found that the late Queen’s disgraced second son 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 future use of Royal Lodge has yet to be decided, but the PAC said the Crown Estate will “need to consider the lessons learned to inform future use and leasing arrangements for Royal Lodge”.

Andrew, who was stripped of his titles over his links to paedophile Jeffrey Epstein and now lives on the monarch’s Sandringham estate in Norfolk, 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 report by the committee published on Friday revealed further details, showing that 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.

And from late 2021, for an undisclosed period of less than a year, Andrew sublet three cottages in total, generating a combined income, before maintenance and expenses, of just over £2,000 a month.

The rent figures were said to be reflective of a percentage of salary and below market rates.

The new details were revealed in a letter from James Chalmers, the Keeper of the Privy Purse and Treasurer to the King, to the PAC, with the information obtained from “the Household of Mr Mountbatten-Windsor” and shared “in the interests of transparency and openness”.

“This is with the agreement of Mr Mountbatten-Windsor,” the letter dated September 7 2026 read, and added: “While you kindly suggested at the hearing that you would be willing to treat this information in confidence, I can confirm that Mr Mountbatten-Windsor is content for it to be in the public domain.”

But the total sub-letting income amount received by the former prince over the past two decades was not divulged and cannot be calculated accurately from the information.

Mr Chalmers wrote that he had “not had access to the underlying documentation or historical records” but shared his understanding on the matter.

The Crown Estate is owned by the monarch ‘in right of the Crown’ and returns its profits to the Treasury for public spending (Charlotte Ball/PA)

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The committee’s recommendations did not completely rule out sub-letting of Crown Estate properties in the future, but said a standard provision in leases should prohibit it, unless the landlord, the Crown Estate, agrees.

“We recommend that for all future leases the Crown Estate adopt a normal commercial practice to sub-letting,” 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 committee also included the Royal Household in its recommendations after an investigation earlier this year by the public spending watchdog the National Audit Office found outdated residential property valuations had led to inconsistencies in the rent charged for non-working members of the Royal family within the occupied royal palaces, which are not part of the Crown Estate.

The report stated: “Although The Royal Household had reviewed and increased these rents over the past six years, it did so without a clearly defined policy setting out how frequently independent valuations should be obtained or how and when rents should be reviewed.”

It recommended: “The Royal Household should implement its policy for setting rent for all its residential properties consistently including defined intervals for independent valuations and rent reviews, to ensure rental income remains aligned with market rates and maximises value for money.”

The Household is responsible for 255 residential properties across the occupied royal palaces estate, including those used by non-working royals Beatrice, Eugenie and the Prince and Princess Michael of Kent.

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.

The current rental rates are now 64% of a 2026 open market valuation for Eugenie, and 68% of a 2026 valuation for Beatrice.

The PAC also recommended the Crown Estate should publicly reveal how it balances the trade off between its statutory responsibilities to maintain and enhance the value of its assets, while also contributing to environmental objectives.

The report said the Estate’s evidence provided “limited insight” on how these were measured and it “remains difficult to understand how The Crown Estate works to strike an effective balance between social value and financial return across its marine, urban and rural portfolios”.

And it urged the Estate to provide greater transparency in its public reporting on how it is diversifying its property across the UK, with 75% of the portfolio concentrated in London and the south-east of England.

The committee questioned why The Gate in Newcastle, the city’s only covered central leisure destination, was marketed for sale for around £15 million after being bought by the Crown Estate for £60 million in 2012.

Sir Geoffrey Clifton-Brown MP, chairman of the PAC, said: “This inquiry arose from a number of questions around the value for money of the financial arrangements pertaining to Royal Lodge.

“With the publication of our report, those arrangements are now fully public.

“But our inquiry sought to add wider value by scrutinising the entirety of The Crown Estate’s governance and management of its large property portfolio.

“We hope that our recommendations in this area help it fulfil its statutory obligations for the benefit of the taxpayer, on behalf of the Crown.”

The Crown Estate is an independent £17 billion property, land and seabed portfolio which returns its profits to the Treasury for public spending.

It is owned by the monarch “in right of the Crown”, which means that while the King owns the estate during his reign, it is not his private property and he does not manage or make decisions about its assets.

A spokesperson for The Crown Estate 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.”

It is understood that the Household’s policy is to typically use a benchmark percentage of a property’s open market valuation as a guide when setting rent levels, in recognition of constraints such as location in a secure area.