Former Prince Andrew collected undisclosed private rental income from three cottages at Royal Lodge for more than two decades while his lease required only a symbolic annual rent, according to a National Audit Office investigation that has put the Crown Estate's management of royal residences under fresh scrutiny in Parliament.
Crown Estate Chief Executive Dan Labbad defended the 2003 agreement during a House of Commons Public Accounts Committee hearing on Monday, arguing that Andrew's ability to sublet the cottages had been factored into an independent assessment of the lease. The arrangement, he said, delivered value to the estate despite the former duke receiving the rental proceeds himself.
"Those potential income streams were taken into account in determining what best value was at the time," Labbad told MPs.
The National Audit Office, or NAO, examined the Royal Lodge agreement as part of its first review of royal residences in two decades. Its findings showed that income generated by the three cottages went to Andrew rather than the Crown Estate, whose profits are returned to the Treasury.
Neither the Crown Estate nor the NAO disclosed how much Andrew received from the properties over the more than 20-year period. Palace sources said the cottages were occupied by staff or retired staff and maintained that the rental income was only sufficient to cover Royal Lodge's running costs.
The unanswered financial question has become a focus for lawmakers examining whether the terms offered to Andrew properly protected public and Crown Estate interests. Officials told the committee they don't currently hold records showing the total rental income collected by the former duke.
Andrew secured Royal Lodge under a long-term lease in 2003 after paying a £1 million premium. He subsequently committed about £7.5 million to refurbishing the property, while his annual rent was set at a "peppercorn" amount if demanded-a nominal payment often used in long leases involving substantial upfront financial commitments.
Labbad said the refurbishment obligation was an important part of the Crown Estate's calculation. By requiring Andrew to fund work on the property, he said, the estate was able to redirect capital toward other investments.
"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," Labbad said.
The Crown Estate chief also told MPs that allowing a leaseholder to sublet property was "reasonably common" under long leasehold arrangements. He said the expected income from the cottages had been considered during the independent valuation and governance process that preceded approval of Andrew's lease.
Still, Crown Estate officials couldn't provide lawmakers with a figure for the money Andrew ultimately collected. Labbad said those payments went directly to Andrew in his capacity as leaseholder and therefore weren't recorded as Crown Estate income.
James Chalmers, the King's Keeper of the Privy Purse and Treasurer, indicated that the Royal Household could gather the information if formally requested by Parliament or the NAO.
"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," Chalmers said.
Public Accounts Committee Chairman Sir Geoffrey Clifton-Brown suggested that the rental figures could be provided confidentially to the NAO if privacy concerns prevented their public release. The proposal would give the watchdog and committee greater visibility into the financial benefits Andrew received without necessarily making the full records public.
The scrutiny comes after Andrew moved from Royal Lodge to Marsh Farm on King Charles III's Sandringham estate following years of controversy surrounding his accommodation. The favourable terms attached to Royal Lodge had increasingly become part of wider questions over royal finances and the management of properties connected to members of the royal family.
