Andrew Mountbatten-Windsor — formerly Prince Andrew, Duke of York, until he surrendered his royal titles in October 2025 amid renewed scrutiny over his ties to convicted sex offender Jeffrey Epstein — sublet three cottages on the Royal Lodge estate while paying a “peppercorn rent” of nominal value for more than two decades, according to Britain’s first National Audit Office (NAO) review of royal residences in 20 years.
The audit also revealed that King Charles personally pays the rents for Princesses Beatrice and Eugenie’s apartments at St James’s Palace and Kensington Palace through his private Privy Purse, funded by the £700-million Duchy of Lancaster, even though both princesses primarily live elsewhere: Beatrice in a £3-million Oxfordshire home, Eugenie in Portugal with her husband.
The NAO investigation, commissioned in the aftermath of Andrew’s October 2025 title surrender and February 2026 arrest by Thames Valley Police on suspicion of misconduct in public office, has provided the first official accounting of royal property arrangements in two decades. It finds that adjusted rents for the princesses’ accommodation were based on outdated open-market valuations — Eugenie’s 2018 valuation and Beatrice’s 2020 valuation — for several years, only being updated to 2026 market rates in the current year.
The Sovereign Grant, funded by UK taxpayer money, will rise to £132 million for 2025-26 to support royal duties and palace maintenance. The forthcoming Public Accounts Committee inquiry will examine whether these arrangements represent fair value for the British public.
First audit in two decades
A National Audit Office (NAO) investigation into royal residences, which is the first such review in 20 years, has clarified the property arrangements involving Prince Andrew and other members of the Royal Family. The report was commissioned amid ongoing scrutiny of Andrew’s finances and property holdings.
The audit found that Andrew Mountbatten-Windsor received rental income from three cottages on the Royal Lodge estate that he was permitted to sublet under the terms of his lease. The report does not disclose the amount earned, according to the BBC reports.
Palace sources said the cottages were rented to current or former staff members and that the income was used largely to cover maintenance and running costs. Nevertheless, the money was paid to Andrew rather than the Crown Estate, whose profits are returned to the Treasury.
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Although Andrew vacated Royal Lodge earlier this year and moved to Sandringham in Norfolk, he retains the lease on the Windsor estate until October 2026.
The report makes no allegation of wrongdoing and notes that Andrew invested £7.5 million in repairs when he took on the lease, a contribution that exempted him from paying regular rent.
Palace homes for princesses
The audit also revealed that Princesses Beatrice and Eugenie, neither of whom is a working royal, occupy residences within royal palaces in central London.
Princess Eugenie has accommodation at Kensington Palace, while Princess Beatrice has a residence at St James’s Palace. Rent for both properties is paid through the Privy Purse, which is the monarch’s private income, rather than by the princesses themselves.
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Both palace complexes are maintained through the Sovereign Grant, which is funded by public money.
The arrangements have drawn criticism from republican campaigners and royal finance watchdogs.
Former Home Office minister Norman Baker described the system as outrageous, arguing that taxpayers were indirectly supporting luxury accommodation for non-working royals.
He said public tolerance for such privileges was diminishing and called for greater accountability over royal spending.
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Palace defends arrangements
Buckingham Palace insisted that rents paid through the Privy Purse cover any costs associated with the princesses’ accommodation, meaning there is no additional burden on the Sovereign Grant.
According to the report, rents are set at approximately 60 per cent of open-market rates, although the exact amounts paid were not disclosed.
Other royal properties
The audit catalogues 12 properties used by Andrew, his family and staff. It also notes that his lease on East Lodge, another Crown Estate property, is due to be surrendered.
Separately, the report found that the Crown Estate spent nearly £400,000 on repairs before the Prince and Princess of Wales moved into their Windsor residence, Forest Lodge.
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Another non-working royal, Princess Michael of Kent, also occupies accommodation at Kensington Palace paid for through the Privy Purse.
Working royals receive homes rent-free
The report also confirms that working members of the Royal Family receive official accommodation without charge as part of their duties.
These include the King and Queen, the Princess Royal, the Duke and Duchess of Edinburgh, the Duke and Duchess of Gloucester, the Duke of Kent and Princess Alexandra.
The Prince and Princess of Wales also maintain an apartment at Kensington Palace alongside their Windsor home.
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The NAO stressed that its report does not assess value for money or draw conclusions about the appropriateness of the arrangements.
Instead, the findings will inform a forthcoming inquiry by the Public Accounts Committee, which is expected to examine royal property management and financial transparency in greater detail.
Buckingham Palace welcomed the report, saying it reflected the Royal Household’s commitment to openness and would help “correct, clarify or contextualise” public understanding of royal property arrangements.
