© National Audit Office 2026

Investigation into residential property arrangements with members of the Royal family

The Crown Estate and The Royal Household

Session 2026-27
5 June 2026
HC 26

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Report by the Comptroller and Auditor General

Ordered by the House of Commons
to be printed on 3 June 2026

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

Gareth Davies
Comptroller and Auditor General
National Audit Office

28 May 2026

Investigations

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018095 06/26 NAO

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The National Audit Office study team consisted of:

Kaye Dunnet, William Johnson, Adam Taylor and Ee-Ling Then, under the direction of Lee Summerfield

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Key facts

Glossary

What this investigation is about

1 In Autumn 2025, the Committee of Public Accounts launched an inquiry into residential property arrangements provided to members of the Royal family following correspondence with The Crown Estate (TCE), primarily related to Royal Lodge. In this report, we set out the arrangements for residential accommodation for members of the Royal family provided by two organisations – TCE and The Royal Household (the Household).

2 TCE and the Household serve different objectives with distinct roles in relation to providing properties to members of the Royal family. They have separate arrangements to provide accommodation, with different financial terms in line with the overall purpose of each organisation. The Royal family have arrangements with both organisations.

TCE operates independently from government to maintain and enhance property and land assets on behalf of the Crown. As at May 2026, TCE managed a portfolio of 2,475 residential properties in England and is required to achieve the best price in the circumstances when letting or selling properties, including those let to members of the Royal family.

The Household directly supports members of the Royal family and maintains the occupied royal palaces through the Sovereign Grant. In May 2026, the Household managed 255 properties within the occupied royal palaces estate which provide residential accommodation to staff of the Household, members of the Royal family and their Households, and properties leased on the open market to private tenants. Its charges depend on a number of factors.

3 Each organisation has a distinct portfolio of properties based primarily on location though for some areas, such as Windsor, properties are divided at a more local level. There are also arrangements in place and agreed in legislation where properties can pass between the two organisations at the request of the Sovereign (see paragraph 16). Figure 1 provides an overview of the properties each manages which are provided to members of the Royal family.

4 Both TCE and the Household have framework agreements in place with HM Treasury, their sponsor department, to define roles, responsibilities and accountabilities. A key difference is that TCE, as a self-funding public corporation, is not subject to spending controls or funding from government. In contrast, HM Treasury is responsible for issuing and monitoring the Household’s spending of the Sovereign Grant. Both operate in accordance with the principles of Managing Public Money, guidance set by HM Treasury to ensure public funds are used responsibly and effectively.

5 We looked at:

overview of the management of residential property arrangements with members of the Royal family (Part One);

residential leases held by members of the Royal family and managed by The Crown Estate (Part Two); and

The Royal Household’s arrangements for providing properties within the occupied royal palaces in England to members of the Royal family (Part Three).

We also set out other residential accommodation provided to staff supporting members of the Royal family.

6 There are several types of residential properties occupied by members of the Royal family and staff, from apartments within palaces to standalone houses and substantial estates. Some of these are privately owned by the Sovereign or the Duchies. We did not look at arrangements through the Duchies of Cornwall and Lancaster or other privately owned residences. This is a factual review, so the report does not seek to examine and report on value for money. It does not make recommendations.

7 We have provided a glossary of terms for the report. All terms provided in the glossary are for the purposes of the report. They may not represent industry definitions.

Key findings

Residential properties managed by The Crown Estate

8 The Crown Estate (TCE) currently has five residential properties occupied by members of the Royal family and an additional two properties occupied by their staff. This includes The Prince and Princess of Wales, The Duke and Duchess of Edinburgh and Andrew Mountbatten-Windsor. These leases are a mix of short- and long-term agreements, which have different characteristics, and vary in financial terms (Figure 2). The leases were agreed at the open market value of the time, and TCE sought independent, professional advice to inform decisions on the financial terms (paragraph 2.9 and Figure 7, and Appendix Two).

9 TCE has standard processes for agreeing new leases and lease extensions, which it applies to its diverse residential property portfolio, but lease terms inevitably differ. These processes include approval and delegation arrangements, input from independent valuation experts, and consideration of risk. While TCE applies these processes across all properties, individual arrangements vary depending on various factors, including location-specific considerations, differing legislative requirements, and the characteristics of each property (paragraphs 2.10 to 2.15; and Figure 8).

10 TCE uses information from its processes to enter negotiations but ultimately leasing terms vary, reflecting the time, circumstances and condition of the property and preferences of the negotiating parties. We reviewed four property leases occupied by members of the Royal family and two high-value comparators dating from 1971 up to the present day. In our sample, we found that while processes were followed, there were differences in final lease arrangements agreed for properties (paragraphs 2.13 and 2.14). For example:

a Lease terms and types vary

Forest Lodge, the most recently leased property, is a short-term 20-year lease with quarterly rent payments and no upfront deposit due to The Prince and Princess of Wales funding all internal refurbishment costs. Whereas, on a similar property let on a short-term two-year lease an upfront deposit was required as TCE are responsible for funding all internal refurbishments (paragraph 2.14 and Figure 7).

The long-term leases we reviewed all required an upfront premium payment, with either an annual ground rent, (Thatched House Lodge) or peppercorn rent (Royal Lodge, Bagshot Park and comparison property). The value of these payments varies considerably which TCE believes reflects the differing property sizes, location and market conditions at the time at which they were agreed (paragraphs 2.12 and 2.14).

b Leases have different rights within the agreements

Bagshot Park, Thatched House Lodge and Royal Lodge leases have subletting provisions, enabling the residents to generate income themselves with permission from TCE. For example, The Duke and Duchess of Edinburgh reside at Bagshot Park and generated income by renting out the stable block up to 2020. Similarly, three cottages on the Royal Lodge estate were also sublet with income generated from subletting payable to Andrew Mountbatten-Windsor. We do not know what rent was charged (paragraph 2.14).

The leases for Bagshot Park and Thatched House Lodge are assignable and can be passed onto named persons or organisations with the permission of TCE. One property is leased to a company and the other a trust. Thatched House Lodge currently has two leaseholders: Princess Alexandra and THL Trust (paragraph 2.14).

c The responsibility for repair and renovation costs differs: The lease type and conditions dictate the responsibility for refurbishment and renovation costs. Typically, short-term lease repair and refurbishment costs are met by the landlord, and with long-leases, the responsibility falls to tenants. For example, Royal Lodge was negotiated based on the tenant, Andrew Mountbatten-Windsor, committing to spend £7.5 million to renovate the lodge, which reduced the capital premium payment to £1 million and a peppercorn rent. Conversely, TCE pays for the refurbishments of short-term lease properties including around £400,000 to repair Forest Lodge, the three cottages and property grounds, in line with its obligations as the landlord, ahead of The Prince and Princess of Wales moving in, in 2025 (paragraph 2.14).

d Early surrender clauses: Royal Lodge is the only lease we reviewed with an early surrender clause and possible compensation. This means Andrew Mountbatten-Windsor could be entitled to a compensation payment of £301,967.66, assuming a lease surrender date of 30 October 2026 and depending on the condition of the property when handed back. The amount due will depend on dilapidation costs at handover which, at the time of publication, had not yet been assessed. TCE told us the clause was put in place to acknowledge the large investment made by the Andrew Mountbatten-Windsor at the start of the lease. TCE is currently waiting to assess the final condition of the property (paragraph 2.14).

Properties provided through The Royal Household

11 The Household has policies setting out the financial arrangements for use of space and facilities within the occupied royal palaces estate. The amount of rent payable depends on who the tenant is, whether their use is deemed as required for official duties, or whether the accommodation is within a secure location. Any rental income generated supplements the Sovereign Grant to help meet the costs of maintaining the estate (paragraph 3.5, 3.6, 3.8, 3.9, 3.16 and, Figures 10 and 11).

12 Eleven members of the Royal family occupy seven official residences within St James’s Palace and Kensington Palace and use these at no charge in return for their official duties assisting the Sovereign. This includes, The Prince and Princess of Wales, The Duke and Duchess of Gloucester, The Duke of Kent, The Princess Royal, The Duke and Duchess of Edinburgh, and Princess Alexandra as well as The King and Queen. This is a long-standing arrangement. In addition, 21 other post-holders (17 military knights performing ceremonial duties, three military secondees and a member of the clergy) hold accommodation at no charge within the occupied royal palaces (paragraphs 3.8 to 3.11 and, Figures 11 and 12).

13 The Household’s policy is to charge an adjusted rent at typically 60% of the open market value for non-working members of the Royal family. This is due to the properties being located within a secure cordoned area, limiting who can reside there as tenants require security clearance or vetting. Three properties are rented to non-working members of the Royal family in the occupied royal palaces and paid by the Privy Purse. They are Princess Beatrice, Princess Eugenie, and The Prince and Princess Michael of Kent. We reviewed these three rental agreements and available valuations and found:

Up until 2026, rent for the Princesses Eugenie and Beatrice had been set using open market valuations from 2018 for Princess Eugenie and 2020 for Princess Beatrice. There is no recorded valuation on the lease for The Prince and Princess Michael of Kent prior to 2026.

Between March and April 2026 new open market valuations were commissioned on all three properties, which indicated little change in market values being used to calculate the rent.

Rents were not consistently set at 60% of the open market value available at the time (paragraphs 3.12 to 3.15, and Figure 12).

14 The Household generates rental income by charging for residential properties within the occupied royal palaces estate, amounting to £3.6 million in 2024-25. As at May 2026, the Household had 255 properties available for use within the occupied royal palaces. The majority (226), of these are provided at a charge. Of these:

145 of residential properties within the occupied royal palaces estate are used by Household staff who contribute a proportion of their salaries towards accommodation costs. The current rate is set at 16.7% of the staff member’s gross pensionable salary;

32 properties are privately rented units within the palaces that are available on the open market as they sit outside the security cordon. The Household told us that rent is calculated at open market value based on valuations and/or guidance provided by independent estate agents, factoring in market conditions and comparator properties;

12 properties located within a secure cordoned area are charged an adjusted rate, typically 60%, due to the limited number of tenants or residents who can reside within this area including three non-working members of the Royal family;

eight long-term former employees (pensioners who served for a minimum of 20 years) also reside in the occupied royal palaces and pay rent based on a combination of pensionable income and personal circumstances; and

29 properties are not rented, with eight properties currently vacant, 16 undergoing refurbishment, and five being used as welfare spaces for building contractors (paragraphs 1.10, 3.4, 3.5, 3.9, and Figures 9 to 11).

Properties shared or transferred between TCE and the Household

15 In addition to the occupied royal palaces and leases with TCE there are 100 purpose-built accommodation units for former employees of the Household and TCE. Under an agreement, TCE built the accommodation in Windsor in the 1950s to 1970s to house pensioners of the Household and TCE. Forty-three of these are used by the Household for staff and former employees, and the remaining 57 units are allocated to pensioners of TCE or let to staff and the open market where there are vacant units not needed to house pensioners. The Privy Purse pays an agreed total annual fee of £12,980 to TCE as an occupancy charge based on an agreed interest charge on the original building costs (paragraphs 1.23, 3.17 and Figure 4).

16 Properties move between TCE and the Household at the request of the Sovereign under established Acts of Parliament with formal review by HM Treasury. There are currently 52 properties which have been transferred to the Household from TCE. Forty-four are residential flats and cottages located in Windsor for use by the Household for staff and pensioners. Of the remaining eight, four are used by TCE staff, and four are non-residential and occupied by third parties. These are regarded as ‘grace and favour’ properties and are in addition to the purpose-built properties for pensioners. These are included within the 255 properties that the Household manage, mentioned in paragraph 14.

29 properties were made available to the Household under two Acts from 1841: the Frogmore House Act and the Kensington Gardens Palace Act.

23 properties have been made available for the Household to use under The Crown Estate Act 1961.

There have been no requests from the Sovereign for properties to be transferred over from TCE in the last 30 years. Between 1992 and 2024, the Sovereign gave 28 properties back to TCE and the Household and TCE are in early discussions about the return of further properties.

Four of the current properties occupied by members of the Royal family from TCE were formerly ‘grace and favour’ and managed by the Household. They are Forest Lodge, Royal Lodge, Thatched House Lodge and Bagshot Park (paragraphs 1.19 to 1.22, and Figure 4).

Part One

Overview of the management of residential property arrangements with members of the Royal family

1.1 In this section we summarise the different types of residential arrangements with members of the Royal family for properties that are held or managed by The Crown Estate (TCE) and The Royal Household (the Household). We provide an overview of these two organisations that manage these arrangements and set out how the two organisations interact with each other. We do not consider residences and estates such as Balmoral and the Duchies of Cornwall and Lancaster as these are privately owned.

Types of residential properties

1.2 There are several types of properties occupied by members of the Royal family, from apartments within palaces to substantial estates with houses, gardens and associated cottages. Some of these fall within the remit of the Household, others are under the control of TCE, and individuals can have properties provided by either or both organisations. Each comes with its own agreement in terms of the type of leasehold (lease), the length of lease and the financial arrangements. The main factors affecting these arrangements are:

who is responsible for managing the property;

the location of the property;

the relevant legislation;

the type of tenant (staff or former-staff member and working or non-working member of the Royal family); and

the status of the property (official residence and other residences).

We explore each of these in more detail in Parts Two and Three.

1.3 His Majesty The King also owns, manages and funds properties as a private individual and separately from his role as Sovereign. These properties are maintained from the Privy Purse and not through public funds. These properties include Balmoral Castle and Sandringham House and their associated estates.

The Crown Lands Act

1.4 The Crown Lands Act 1851 reorganised how the crown properties and land known as the ‘Crown lands’ were managed by separating the public interest elements (including palaces and castles) from the commercial revenue generating functions.¹ The revenue-generating functions eventually became the responsibility of what is now The Crown Estate. The public functions, which included the maintenance and management of royal palaces, became the responsibility of different government departments and the Household.

Responsibility for managing residential properties used by members of the Royal family

1.5 There are two organisations – TCE and the Household – who provide properties to members of the Royal family. Each operates within its own legislation and framework which sets out its objectives, role and remit, and relationship with government. Each provides different types of accommodation (Figure 3).

The Royal Household

1.6 The Household is responsible for supporting the Sovereign and other members of the Royal family in their official duties. The Sovereign receives income from the Duchy of Lancaster, which is a private estate held by the Sovereign for the benefit of the present and future Sovereigns and is also used by The King to support other working members of the Royal family. The Household is funded from public funds allocated through The Sovereign Grant Act 2011, referred to as the ‘Sovereign Grant’.² The Sovereign Grant Act 2011 streamlined funding arrangements by replacing the civil list and grants-in-aid with a single grant, which was first paid in 2012.

1.7 The main objectives of the Household are to:

support the Sovereign in serving the nation as Head of State, while ensuring that value for money is achieved;

maintain the occupied royal palaces as buildings of State to a standard consistent with the Household’s operational requirements and with the royal, architectural and historic status of the buildings in a manner which ensures value for money; and

seek to contract in the most economical and efficient manner for the supply of all services, consistent with the appropriate safety and security requirements.

1.8 The Sovereign Grant Act 2011 sets out the areas for which the Sovereign Grant can be used, specifically to fund:

the central staff costs and running expenses of His Majesty’s official Household;

the maintenance of the occupied royal palaces; and

the cost of The King’s travel on official engagements and travel by members of the Royal family representing His Majesty.

1.9 The Sovereign Grant remained the same from financial year 2021-22 to 2024-25, at an annual total budget of £86.3 million. This covers both the core budget (£51.8 million) and reservicing programme budget for Buckingham Palace (£34.5 million). The grant increased in 2025-26 to £132.1 million (£72.1 million core budget and £60 million reservicing) and is set at £137.9 million for 2026-27.

1.10 In May 2026, the Household had 255 properties available to staff, pensioners, military knights, members of the Royal family, or private tenants, within the occupied royal palaces. Income generated from the use of the occupied royal palaces estate supplements the Sovereign Grant for the maintenance of the properties across the estate. In 2024-25, the Household generated an income of £21.5 million, which offset the spend over and above the Sovereign Grant budget.³

1.11 HM Treasury is the sponsoring government department and is responsible for issuing and monitoring spend through the Sovereign Grant to ensure it is in line with a framework agreement between HM Treasury and the Household. The framework also sets roles and responsibilities, governance and accountability arrangements.

1.12 In addition to the Sovereign Grant, official duties of members of the Royal family and maintenance of the occupied royal palaces are funded by other sources. For example, the Royal Collection Trust provides funding to manage public access to official residences and, the Privy Purse, through the Duchies of Lancaster and Cornwall, are used as official and private expenditure for working members of the Royal family.⁴

The Crown Estate

1.13 TCE is an independent self-funding public corporation that acts in the national interest to manage land, property and the seabed across England, Wales and Northern Ireland on behalf of the Sovereign ‘in the right of the Crown’.⁵ TCE’s remit is set by The Crown Estate Act 1961 as amended by The Crown Estate Act 2025 (the Act). A framework agreement with HM Treasury (details below) states its objectives are to:

maintain and enhance land and other assets which it holds on behalf of the Sovereign ‘in the right of the Crown’; and

pay its net revenue profit each year to the consolidated fund.

1.14 TCE aims to deliver these objectives by securing long-term value from the land and assets it manages. It operates independently of government and the Sovereign, which means that even though the Sovereign owns the estate, the Sovereign does not manage or make decisions about its assets. The Act gives TCE the freedom to sell and lease assets subject to certain limitations. This includes a maximum lease term of 150 years and restrictions on the disposal of land within protected areas, such as parts of the Windsor Estate and Regents Park. Section 5 of the Act places a duty on TCE’s Commissioners to maintain the Windsor Estate as a Royal park and forest.

1.15 HM Treasury is also TCE’s sponsor department and the Chancellor of the Exchequer is its sponsoring minister. TCE operates within an agreed framework with HM Treasury in accordance with the principles of Managing Public Money. As public corporations are not usually subject to Managing Public Money, HM Treasury’s role on a day-to-day basis is limited. However, it discusses strategy and business plans with TCE and is informed of progress and how resources are being used to deliver plans. HM Treasury oversee the appointment of non-executive directors, and the Chief Executive. Although not subject to spending controls, TCE is expected to inform HM Treasury of any novel, contentious or repercussive matters relating to spending, income or finance.

1.16 TCE is responsible for generating profit from the land and assets it manages. The profit covers TCE’s operating costs, and it retains a percentage of its profit to cover maintenance costs across the portfolio and capital for investment opportunities.⁶ The net profit is provided to HM Treasury and forms the basis of the budget for the Sovereign Grant which funds the official duties of the Sovereign and maintenance of the occupied royal palaces. In 2024-25, TCE generated a gross profit of £1.6 billion, and returned a net profit of £1.1 billion. It has returned a total of £3.3 billion in the last five years.

1.17 In 2025, The Crown Estate Act 2025 came into law, with seven amendments to the Act which:

allowed TCE for the first time to access borrowing and to invest more flexibly with approval from HM Treasury;

allowed an increase in the number of commissioners on TCE’s board from eight to 12, with the salaries and expenses of commissioners, including staff appointed by them to be paid out of the income of TCE; and

focuses on sustainable development.

Relationship between The Crown Estate and The Royal Household

1.18 Although TCE and the Household manage distinct and separate portfolios, established Acts of Parliament allow for properties to be transferred from one to the other for specific uses.

Transfer of properties at the request of the Sovereign

1.19 There are three pieces of legislation defining how properties move between the two organisations. The Frogmore House Act 1841 and the Kensington Gardens Palace Act 1841 moved a set of Windsor properties from TCE to the Household and would need to be repealed in legislation for these properties to be moved back. The Crown Estate Act 1961 allows houses to be moved between the two bodies at the request of the Sovereign and can be made on terms approved by HM Treasury (Figure 4).

1.20 Houses transferred between the Sovereign and TCE are commonly referred to by TCE and the Household as ‘grace and favour’ properties. However, unlike the commonly held definition – “a grace-and-favour home is owned by a sovereign, a government, etc. and given for someone to live in or use without paying rent, usually because of their job” – none of these properties are occupied for free.⁷ For these properties, the financial arrangements vary and depend on several factors, including who the tenant is and the role they perform.

1.21 Currently, there are 52 properties which have been transferred from The Crown Estate under these three Acts. Under the Frogmore House Act 1841 and Kensington Gardens Palace Act 1841, 29 properties were given over to the Sovereign in 1841. Forty-four of these properties are occupied by Household staff or pensioners with repair and the upkeep being the responsibility of the Household through the Privy Purse. Of the remaining eight, four are occupied by TCE staff and four are non-residential and occupied by third parties.

1.22 The Crown Estate Act 1961 allows any house forming any part of TCE’s estate to be transferred into or out of the control and management of TCE to the Sovereign. Similarly, the Sovereign has the ability to transfer any house currently under its management to TCE. 8 Between 1992 and 2024, the Sovereign used this Act to hand 28 properties back to TCE, with nothing returned to TCE since then. The Household and TCE are in early discussions about the return of further properties. There have been no requests for properties to be transferred over to the Sovereign for use under ‘grace and favour’ in the last 30 years. TCE told us that four of the current properties it leases to members of the Royal family were formerly ‘grace and favour’ and were transferred back to TCE by the Household in the 1940s to early 2000s. This includes Forest Lodge, Royal Lodge, Thatched House Lodge and Bagshot Park.

1.23 In addition to those properties that have been transferred under Acts of Parliament, there are also 43 properties in Windsor that are made available to the Household for a nominal fee under an agreement with TCE. In the 1950s through to the 1970s, TCE built 100 units with the purpose of providing accommodation to former Household and TCE staff. The Household pays TCE a total annual occupation charge of £12,980 from the Privy Purse based on an agreed interest charge on the original building costs, for all 43 of these properties. The Household is responsible for the internal repair of the properties with TCE responsible for the external decoration, repair and insurance. The remaining 57 properties house pensioners of TCE who pay rent based on a percentage calculation of their final pensionable salary at the time of retirement.⁹

1 Crown Lands Act 1851, chapter 42, available at: www.legislation.gov.uk/ukpga/Vict/14-15/42, accessed May 2026.

2 The Sovereign Grant Act 2011, available at: www.legislation.gov.uk/ukpga/2011/15/contents, accessed March 2026.

3 Income included £4 million from property rental, £10.5 million from facilities management charges, and £7 million of recharges and other income.

4 The primary purpose of the Royal Collection Trust is to care for the Royal Collection and look after visitors to the Royal Palaces.

5 Under the Scotland Act 2016, assets owned by the Sovereign in Scotland were devolved to The Crown Estate Scotland operating under The Scottish Crown Estate Act 2019 (Scottish Crown Estate Act 2019, available at:
www.legislation.gov.uk/asp/2019/1, accessed May 2026).

6 In 2024-25, TCE retained 27% (£441 million) of its gross profit for income retained as capital.

7 Definition taken from Cambridge online dictionary available at: www.dictionary.cambridge.org/dictionary/english/grace-and-favour?q=%27grace+and+favour%27

8 There is no legal transfer of the property title; this always remains in the name of the Sovereign.

9 Pensioner accommodation is made available to TCE employees who were employed prior to 1 April 1995 with a minimum continuous service of 15 years with allocated accommodation during their service period and who did/ do not own their own property. Rent is based on 1/80th of their final salary and an assumption of 40 years’ service, regardless of time served.

Part Two

The Crown Estate

2.1 This part outlines The Crown Estate’s (TCE’s) portfolio, and its approach for leasing residential properties to members of the Royal family. It explains the differences between the types of leases TCE manages, and the process TCE take when arranging leases.

The Crown Estate’s portfolio

2.2 TCE’s portfolio is varied and includes the following: a marine portfolio managing the seabed¹⁰ and most of the coastline around England, Wales and Northern Ireland, supporting the UK’s offshore wind development; commercial and residential property developments across England; and rural land management. As of 31 March 2025, TCE had four business areas: London, Marine, Regional and Windsor and Rural valued at £13.4 billion (Figure 5).¹¹

2.3 TCE’s portfolio also includes properties that fall within the Windsor Estate (Windsor) and Richmond Park, some of which are leased to members of the Royal family (see Figure 7 and Appendices Two and Three).¹²

The Crown Estate’s residential portfolio

2.4 As part of its portfolio, TCE manages 2,475 residential properties across England, Northern Ireland and Wales, as at May 2026.13 The types of property range from substantial high-value listed buildings to blocks of flats and cottages. Tenants vary from the public, companies or governments, for example embassies and members of the Royal family. As at May 2026, 82 properties were vacant and 90 properties were occupied by TCE staff, provided as part of their employment. TCE’s policy is for staff to pay 21.4% of their gross salary as rent.

2.5 In 2024-25, TCE’s residential assets made up approximately 8% (£1.1 billion) of TCE’s portfolio capital value (£13.4 billion). The London portfolio is the largest, valued at £808 million with the Windsor portfolio valued at £247 million. The majority of TCE’s residential properties are in London (1,614) and Windsor (644). In 2024-25, TCE reported an income of £21 million for its residential portfolio. London was the largest income earner, responsible for 63% (£13.2 million) of total income from residential properties (Figure 6).

Types of residential leases used by The Crown Estate

2.6 TCE uses two types of leases for residential property: short-term leases of up to 21 years, and long-term leases from 21 to 150 years. The difference in lease length relates to the impact of two Acts of Parliament: the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993.14 These Acts give leaseholders the right to buy the freehold title of their property or extend the lease of their property in a process known as ‘enfranchisement’.

2.7 TCE is not bound by the legislation of either Act as it operates under The Crown Estate Act 1961. However, TCE provides Parliament with a commitment to voluntarily operate in accordance with the legislation, where possible, apart from in protected areas of the estate. In these areas, for example, Windsor, tenants are unable to obtain the freehold of their properties. Where appropriate, they may be able to extend their lease up to 90 years, to a maximum aggregate of 150 years.

2.8 In 2024-25, 974 (39%) of TCE’s residential properties were leased on a short-term basis, with 1,501 (61%) on a long-term basis. The breakdown of the residential portfolio by lease type varies between location. In London, the majority of properties (1,296 (80%)) are on long-term leases, whereas in Windsor, 511 (79%) are on short-term leases.

The Crown Estate’s residential leases occupied by members of the Royal family

2.9 TCE currently has five residential properties occupied by members of the Royal family, and an additional two properties occupied by their staff (Figure 7). Four are short-term lease agreements, and three are long-term. Further details are in Appendices Two and Three.

Differences between short- and long-term leases

2.10 There are several differences between the characteristics of short- and long-term leases (Figure 8). For example, short-term leases usually require a deposit and regular rent payment, whereas long-term leases involve an upfront larger ‘premium’ payment to ‘buy out’ ground rent of the lease term with an agreed ‘peppercorn’ rent.

2.11 The role of TCE also differs between lease types. TCE is more involved in the ongoing management of short-term leases as the landlord, as it is responsible for the maintenance and repair, including periodic inspections of the property. The role of TCE for long leases is narrower and could involve specific requests by the tenant, for example, a lease extension, licence request or where there is a known or suspected breach of the lease which may require a property inspection. The responsibility for ongoing maintenance and repairs sits with the tenant.

2.12 TCE told us there are several factors that influence the type of lease negotiated when considering leasing options for residential properties. These include the following:

Generation of income: Short- and long-term leases generate income in different ways. Short term leases typically provide a regular payment of rent, usually on a monthly or quarterly basis, whereas long-term leases involve an upfront ‘premium’ payment, providing TCE with a capital lump sum to reinvest elsewhere.

Condition of the property: Properties often require refurbishment or renovation ahead of a tenant moving in. TCE can negotiate with tenants for long-term leases to pass on the costs of repair and maintenance to the tenant, which for larger properties can be at a substantial financial cost. For short-term leases, TCE would pay for upgrades, with the agreement of the tenant as part of the tenancy negotiations.

Risk of enfranchisement: TCE’s portfolio is protected from being subject to enfranchisement due to Crown immunity. However, TCE aims to further minimise this risk, where possible, by securing short-term leases below 21 years, thus preventing the possibility of leaseholders buying the freehold of a property.

Comparison of leases with members of the Royal family

2.13 We reviewed TCE’s approach to leasing residential properties across a sample of six leases, including four properties occupied by members of the Royal family and two comparable high-profile, non-royal leases. Comparator leases chosen included both short- and long-term lease agreements. For each lease, we compared TCE’s approach against identified key steps for agreeing leases and compared the terms and conditions against the comparator properties. The inclusion of comparator properties enabled us to consider both the processes followed and the consistency of lease arrangements between Royal and similar non-royal leases.

Variation between lease agreements

2.14 Generally, we found TCE applied standard practices across the leases we examined and in line with its processes. Where we found differences, these related to specific terms within lease agreements for the same lease type. Each lease was agreed at different points in time over a 50-year period, so some variation in practice and outcomes is to be expected.

Lease terms and types: Within the six leases we reviewed, the length of lease varied significantly. Forest Lodge, recently leased, is on a 20-year short-term lease with quarterly rent payments and no upfront deposit. This is due to The Prince and Princess of Wales paying for all the internal refurbishments as is TCE’s standard practice for leases of 20 years. Forest Lodge’s comparator property is leased on a two-year short-term lease with an upfront deposit, and TCE responsible for the costs of all internal refurbishments. The other long-term leases range in term from 70 to 150 years, all requiring an upfront premium payment, with either an annual ground rent (Thatched House Lodge) or peppercorn rent (Royal Lodge, Bagshot Park and comparator property).

Legislative or security restrictions: 63% (1,567) of TCE’s residential properties are in protected areas which means they cannot be sold or, where there are existing tenants, they are not entitled to buy the freehold of the property. All five of the properties occupied by members of the Royal family are within these protected areas. Security considerations may also impact the number of suitable or available tenants, which can affect the approach to the property valuation and/or the lease terms agreed.

Repair and refurbishment costs: The six properties at the time of leasing were in different states of repair and required different levels of investment. In 2003, Royal Lodge needed significant refurbishment estimated to cost £5 million. As the lease was signed, Andrew Mountbatten-Windsor agreed to spend £7.5 million on improvements. Eclipse Nominees Limited (Bagshot Park) and Princess Alexandra (Thatched House Lodge) also both committed to funding initial repairs and improvements. A minimum spend of £10,000 was committed to as part of the lease terms for Thatched House Lodge in 1971. Eclipse Nominees held a lease for Bagshot Park from 1998 to 2007, which committed a restoration spend of £1.38 million. TCE is responsible for funding the renovation costs on short-term leases. Prior to The Prince and Princess of Wales moving into Forest Lodge, TCE paid around £400,000 to repair Forest Lodge, the three cottages and property grounds in line with their obligations as landlords.

Leaseholders: Four of the property agreements we reviewed are leased to individuals. However, two are leased to either a company or trust and occupied by members of the Royal family. Bagshot Park has been leased to Eclipse Nominees Limited since 1998 but is occupied by The Duke and Duchess of Edinburgh. Thatched House Lodge has two leaseholders. Princess Alexandra is the current tenant under a lease from 1971. With a second lease granted in 1995 to Seccol Investment Limited. This was assigned to THL Trust in 2017. Both leases are active with the 1971 lease as the main one until it ends in 2041. After that, THL Trust will be the only leaseholder, with the lease running until 2144.

Permitted uses of the property: Each agreement had its own conditions relating to the permitted uses for the main property, land and associated buildings within the lease.

This included variation in the assignability of the lease – the ability to allocate the lease to other people or organisations. For example, Bagshot Park, and Thatched House Lodge are assignable leases, meaning each could be handed over to a suitable third party with permission from TCE. In 2017, the 1995 lease for Thatched House Lodge was assigned by the leaseholders, Seccol Investments Limited, to THL Trust with the same lease terms (see Appendix Two).

Leases for Bagshot Park and Thatched House Lodge allow for the property and land to be sublet as a whole, with Bagshot Park also able to sublet parts of the estate separately. For example, the stable complex at Bagshot Park was previously sublet to a third party up to 2020.15 The lease also allows The Duke and Duchess of Edinburgh to sublet the entire estate with the agreement of TCE for up to 21 years. This allows the leaseholder to generate income for themselves, which is not returnable to TCE. The two leases for Thatched House Lodge have differing subletting conditions, including allowing subletting when abroad and for restricted durations and frequency.¹⁶ The lease for Royal Lodge also allows for the subletting of three cottages within the estate but not the main property. All three cottages were rented to tenants directly by Andrew Mountbatten-Windsor. These have been vacant since April 2026. We do not know what rent was charged.

Property valuations: In each lease, TCE commissioned independent valuations to inform negotiations with tenants. Those valuations were provided to TCE’s approval committee for sign off at executive level.¹⁷ Negotiations between TCE and representatives of the tenants resulted in agreed prices which were within the recommended price range of the independent valuation. We saw examples where prolonged periods of negotiations and housing market movements impacted valuations. For example, in the case of Bagshot Park, the property increased in market value over the course of the negotiation period, whereas the value of Royal Lodge decreased during lease negotiations. In Royal Lodge, TCE initially sought £3.5 million upfront payment (consisting of a £1 million premium plus a £2.5 million buy-out of the rent). It estimated that the necessary refurbishment of the property would cost at least £5 million. In August 2003, Andrew Mountbatten-Windsor made a commitment to spend £7.5 million on refurbishment, and the final settlement reduced to a £1 million premium with a peppercorn rent. TCE confirmed the renovations had concluded within two years of the lease start date.

Termination clauses: We considered terms within the leases for termination clauses to identify the process where the lease expires or where the tenant wishes to surrender the lease before the end date. All leases have terms included where the tenant would need to return the property to its original condition or to good repair; however, Royal Lodge is the only lease with an early surrender clause. This means Andrew Mountbatten-Windsor is entitled to a compensation payment on a reducing scale, depending on when the lease is surrendered. The compensation payable is based on a total of £6.96 million, which reduces as the lease term progresses over the first 25 years of the lease. At the time of surrendering the lease, Andrew Mountbatten-Windsor was 22 years into the 75-year lease, which could mean a payment between £301,967.66 and £488,342.21, depending on when the lease is surrendered up to and including the exit date of 30 October 2026. TCE told us the clause is to recognise the large investment made by Andrew Mountbatten-Windsor at the start of the lease. The compensation calculation will be offset against any dilapidation costs identified on final inspection and handover of the property to TCE.

2.15 We have not been able to compare TCE’s approach for early surrender or the ending of a long-term lease. In the last 10 years, TCE confirmed it has only processed the expiry or surrender of five leases. Despite notice to surrender the lease for Royal Lodge being given in October 2025, the property is not due to be handed back to TCE until 30 October 2026 at the latest, as 12 months’ notice is required. Therefore, we were unable to review the approach to managing the end of this lease.

10 TCE has responsibility for the seabed out to 12 nautical miles.

11 As of 31 March 2026, TCE had restricted to three business areas: Urban, Marine and Windor Estate and Rural.

12 The Windsor Estate includes Windsor Great Park, Home Park, Sunninghill Park and Swinley Forest.

13 As of May 2026, all TCE’s residential properties were located in England.

14 Leasehold Reform Act 1967, available at: www.legislation.gov.uk/ukpga/1967/88/contents, accessed March 2026; and Leasehold Reform, Housing and Urban Development Act 1993, available at: www.legislation.gov.uk/ukpga/1993/28/contents, accessed March 2026.

15 The lease allows for the stables to be used as offices, research and development, stabling of horses or residential accommodation.

16 The 1971 lease has a restricted subletting provision, allowable when Princess Alexandra is abroad. The 1995 lease has a minimum and maximum underletting provision between nine months and three years and limits the frequency of subletting.

17 Due to the age of the lease, we were unable to confirm Thatched House Lodge’s approval process.

Part Three

The Royal Household

3.1 This part sets out the role of The Royal Household (the Household) in managing and funding accommodation in the occupied royal palaces. It explains the financial arrangements used to determine who pays rent and what it does with the income.

The Household’s property portfolio

3.2 The Household manages the land and buildings in the occupied royal palaces or heritage assets (referred to as the estate) and maintains them for the benefit of future generations in the right of the Crown. Under The Crown Lands Act 1702, the Household is unable to sell any part of the estate.¹⁸ The occupied royal palaces estate is used for formal entertaining and ceremonial events, as well as office space and residential accommodation. It consists of:

Buckingham Palace;

St James’s Palace, including Clarence House and Marlborough House Mews;

the residential and office areas of Kensington Palace;

The Royal Mews and Royal Paddocks at Hampton Court; and

Windsor Castle and buildings in the Windsor Estate (Windsor).¹⁹

3.3 It does not include the estate managed by Historic Royal Palaces, a charity tasked with conserving non-occupied royal palaces such as the Tower of London, Hampton Court Palace and parts of Kensington Palace. The Palace of Holyroodhouse, the official residence for the Sovereign in Scotland, is maintained by Historic Environment Scotland.

3.4 As at May 2026, there were 255 residential properties within the occupied royal palaces estate, managed by the Household and made available for members of the Royal family, current and former staff, and other tenants (Figure 9).

3.5 The Household’s policy is to recharge for the space and facilities where the use is not for the purpose of undertaking official duties. In 2024-25, the Household received £4 million of rental income, of which £3.6 million is from residential properties across the occupied royal palaces estate primarily via charges from staff accommodation, and external lettings. For example, the Royal Collection Trust is charged rent for an apartment in St James’s Palace where the Household would have been able to rent and earn income. Some properties – those outside the secure cordon – are available to rent to the public at open market rates.

3.6 The income contributes towards the maintenance costs of the occupied royal palaces estate. The income increased by 11% between 2020-21 and 2024-25 (Figure 10). The Household told us it plans to further increase revenues from rentals by increasing the number of residential properties within its estate. For example, it plans to convert four properties currently used as office space into accommodation, pending approval in the 2027-28 Sovereign Grant 3-year business plan. The Household is hoping to reduce the secure cordoned area at St James’s Palace, allowing these to be rented on the open market.

Residential properties managed by the Household

3.7 All properties available for rent are located within the occupied royal palaces estate. These properties provide residences for both members of the Royal family and current and former Household staff.

The Household’s residential agreements

3.8 The Household has different agreements in place, depending on several factors, including who the tenant is and their role. This is set out in an internal finance manual, which provides guidance on each of these arrangements. For members of the Royal family, the key distinction is whether they carry out official duties on behalf of the Sovereign, defined as ‘working’ members of the Royal family, or ‘non-working’ members of the Royal family, if they do not have any official duties.

3.9 The Household’s policy is to rent properties at open market value where they are outside the secure cordon and it is able to maximise the income from those properties. Where the property is located within a secure cordoned area, an adjusted rate is applied due to the limited number of appropriate tenants or residents who can reside within this area; this includes some pensioners – former staff members of the Household (Figure 11). The Household’s policy is to apply the following financial terms to properties:

Staff members of the Household, currently pay 16.7% of their gross pensionable salary and deducted from the net salary (after tax and NI deductions). In some limited cases, the percentage amount may vary at the discretion of the Keeper of the Privy Purse.

Private tenants or residents outside the secure cordon, where rent is calculated at open market value based on valuations provided by independent third-party estate agents, factoring market conditions and against comparator properties.

Private tenants within secure cordoned areas (requiring security clearance or vetting), where rent is typically calculated at an adjusted rate using 60% of the open market valuation. The rent is based on valuations provided by independent third-party estate agents and or market conditions. Typical residents are staff of the Household and other households of working members of the Royal family where it is not their primary residence. Properties may also be rented to senior government officials from the UK or the Commonwealth who hold Household security clearance.

Military knights, where the tenancy is offered to retired military officers at no charge in exchange for certain ceremonial and official duties. These are all located in Windsor Castle. In addition, some properties have been allocated to Ministry of Defence or Commonwealth secondees, where the Household receive full-time employment services for free on the agreement that accommodation is provided.

Pensioners inside secure cordoned areas, designated for former staff who have worked for the Household more than 20 years and offered at an adjusted rental rate. This is only considered when there is no available accommodation in Windsor (see paragraph 1.23).

Arrangements for working members of the Royal family

3.10 In addition to The King and Queen, there are nine working members of the Royal family supporting the duties of the Sovereign: The Prince and Princess of Wales, The Duke and Duchess of Gloucester, The Duke of Kent, The Princess Royal, The Duke and Duchess of Edinburgh and Princess Alexandra. In return for these official duties, these members of the Royal family can access residences at Buckingham Palace, Windsor Castle, St James’s Palace or Kensington Palace at no charge.²⁰ They occupy seven properties. For example, Kensington Palace is the official residence of The Prince and Princess of Wales and their children, and the Duke and Duchess of Gloucester and the Duke of Kent.

3.11 The Household also charges rent on an adjusted basis where a working member of the Royal family has more than one property within the occupied royal palaces estate which is not their official residence. There are currently no such cases.

Arrangements for members of the Royal family without official duties

3.12 There are three properties occupied by non-working members of the Royal family in St James’s Palace and Kensington Palace - Princess Beatrice, Princess Eugenie and The Prince and Princess Michael of Kent (Figure 12). These properties are rented at an adjusted rate – which should typically be 60% of the open market rental value of a comparable range of properties outside the cordon. This is due to the limited number of tenants that would be suitable to take up residence as properties are located in a secure cordoned area with tenants requiring security clearance or vetting. The Household told us rent is based on valuations provided by an independent third-party estate agent.

3.13 We reviewed the three current lease agreements and valuations for all three non-working members of the Royal family. These leases, referred to as licences, are agreed annually for a one-year period. Prior to 2026, the property leased to Princess Eugenie last had a valuation undertaken in 2018, and for the property leased to Princess Beatrice, the last valuation was completed in 2020. These were the open market rental values used continuously for each annual agreement to date. There was no documented open market valuation for the lease with The Prince and Princess Michael of Kent prior to 2026.

3.14 Between March and April 2026, the Household commissioned updated valuations for all three properties, which found that the open market rental value had barely changed on these properties over seven years. During our examination of the leases, we found that not all rental values were set at 60% against the valuations they had available and it is not clear on what basis the rental costs increased during these periods, as the basis of the valuation did not change. We found that:

In 2020 and 2021, Princess Eugenie’s rent was set at 50% of the 2018 open market value, increasing to 55% in 2022. In 2023, the rent was set at 60% and increased to 63% for 2024 and 2025. It is currently at 64% of the 2026 open market valuation and is paid by the Privy Purse.

Princess Beatrice’s rent was paid at 60% of the 2020 open market value in 2020 and 2021, increasing to 62% in 2022, 65% in 2023 and 68% for 2024 and 2025. The current rental rate is set at 68% of the 2026 open market valuation and is paid by the Privy Purse.

No valuations were available prior to 2026 for the accommodation rented by The Prince and Princess Michael of Kent. Rent has increased 34% between 2020 and 2026, and is now 63% of the 2026 open market valuation and is paid by the Privy Purse.

3.15 It is the responsibility of the resident member of the Royal family to fund the cost of interior furnishings for offices and residences within the occupied royal palaces estate.

Arrangements for staff accommodation

3.16 As at May 2026, there were 145 properties for staff members of the Household within the occupied royal palaces estate. Staff working for the Household and living in single person’s or self-contained residence within the occupied royal palaces estate contribute a percentage of their salary to cover costs associated with property maintenance and furnishing, and for those in single person residence, costs towards utilities and meals. The current deduction is set at 16.7% of their gross pensionable salary and deducted from the net salary (after tax and NI deductions).

3.17 The Household also provides residences for former staff members through pensioner flats and bungalows in Windsor. There are 43 properties currently provided to pensioners with the Household paying an annual occupation charge for the 43 properties of £12,980 to The Crown Estate (TCE) under an agreement between TCE and the Household. The payment is based on an agreed interest charge on the original building costs from the 1950s to 1970s. The Privy Purse funds the internal repairs and upkeep, with TCE responsible for the external decoration, maintenance and insurance. Pensioners must meet certain criteria to be eligible and pay an agreed rent based on the size of the property which is indexed annually.

18 Crown Land Acts 1702, available at www.legislation.gov.uk/aep/Ann/1/1/contents, accessed May 2026.

19 The Household and The Crown Estate manage different parts of Windsor. The Household is responsible for the castle and specific properties annexed to it that were transferred to the Household under legislation (see paragraph 1.19).

20 Other expenses may be provided for members of the Royal family while performing official duties. These include expenses for official residences for travel, business rates and maintenance costs, postage, and utilities.

Appendix One

Our investigative approach

Scope

1 The investigation was prompted by the Committee of Public Accounts launching an inquiry into residential property arrangements provided to members of the Royal family following correspondence with The Crown Estate (TCE), primarily related to Royal Lodge. In this report we set out the arrangements for residential accommodation of members of the Royal family provided by two organisations – TCE and The Royal Household (the Household). This is a factual review, so the report does not seek to examine and report on value for money. It does not make recommendations.

2 The investigation specifically, looks at who is responsible for the management of the residential properties occupied by members of the Royal family; residential leases TCE manages with members of the Royal family; and the Household’s arrangements for providing residential properties within the occupied royal palaces in England to members of the Royal family. We also set out other residential accommodation provided to staff supporting the Royal family.

3 There are several types of residential properties occupied by members of the Royal family and staff, from apartments within palaces, to standalone houses and to substantial estates. Some of these are privately owned by the Sovereign or the Duchies. We did not look at arrangements through the Duchies of Cornwall and Lancaster or other privately owned residences.

Methods

4 In examining these issues, we drew on a variety of evidence sources as described in the paragraphs below. We collated and analysed the evidence using our investigative criteria as a framework. We looked across different sources of evidence to support each of our findings.

Interviews

5 We interviewed key individuals from TCE and the Household to establish arrangements for managing their respective property portfolios specifically the accommodation available to members of the Royal family. These interviews took place between December 2025 and May 2026.

TCE (responsible for five properties occupied by members of the Royal family, and an additional two occupied by their staff, in Windsor and London). We conducted online and in-person interviews with senior officials with oversight of the senior leadership team:

the Managing Directors of the London and Windsor residential property portfolios;

representatives from the leadership team for two teach-in sessions including the Chief Executive Officer, Chief Financial Officer, Executive Director and Director of Corporate Affairs and Legal representative; and

the Chief Executive Officer who oversaw the negotiations for the lease of members of the Royal family processes and high-profile London comparator properties.

The Household (responsible for the residential properties within the occupied royal palaces estate). We interviewed the Keeper of the Privy Purse, Deputy Treasurer to The King, and senior representatives from the property management team.

HM Treasury (sponsoring department for both TCE and the Household). We interviewed the Treasury Office of Accounts representative and the liaison point for both organisations within HM Treasury.

Document review

6 We have reviewed a range of published and unpublished documents provided by TCE and The Household. We used this information to understand the arrangements in place across both organisations for residential properties with members of the Royal family.

7 Our review encompassed over 130 documents, including:

lease arrangements for Royal Lodge, Forest Lodge, Bagshot Park, Thatched House Lodge and two high-profile London properties including lease agreements and independent valuations, and internal approval committee papers;

procedural documents for leasing residential properties under TCE;

legislative documents;

data on properties categorised as ‘grace and favour’;

financial terms and arrangements for residential properties managed by the Household;

submissions to the Committee of Public Accounts;

the Annual Report and Accounts for TCE and The Household;

framework agreements between HM Treasury and TCE and The Household; and

breakdown of residential property portfolios for TCE and the Household.

8 We also attended two teach-ins by TCE and visited the Windsor Estate on 2 March 2026, hosted by the Managing Director of Windsor and Rural at TCE. We were able to understand the scale of the estate and, the complexities of managing properties occupied by members of the Royal family and to conduct further lines of enquiry whilst onsite.

Data analysis

9 We analysed data provided by TCE and the Household on the residential properties they hold to better understand who is responsible for managing the properties occupied by members of the Royal family, the arrangements in place, and the approach taken in leasing properties under each organisation.

10 We conducted a sample review of six leases to compare TCE’s approach to lease arrangements with members of the Royal family against similar high-profile leases. We compared the lease arrangements for Royal Lodge, Forest Lodge, Bagshot Park, Thatched House Lodge and two London comparator properties. This allowed us to draw conclusions on the processes followed and, compare key details of the approach taken and as well as the specifics of lease arrangements across the sample.

Data limitations

11 The data we collected, analysed and reported were provided by TCE and the Household, alongside published documents and data provided by our financial audit teams with the approval of the Household. We reviewed, challenged and presented the data provided by both organisations but did not validate the datasets in this report or provide assurance of their accuracy. We have noted where and if any caveats or limitations exist throughout the report. We did not review the terms of residential property agreements between each organisation and its staff members.

12 We did not undertake a review of all property agreements between the Household and members of the Royal family nor did we examine rental agreements with staff, pensioners or private tenants. We only reviewed the agreements and valuation documents for the three non-working members of the Royal family with residential properties within the occupied royal palaces. This allowed us to examine the terms of the agreements against the policy to provide rent at 60% of the open market value. We also reviewed an expired agreement for a working member of the Royal family, to check the terms of an adjusted rent of 60% of the open market value (due to it being a second property within the occupied royal palaces estate).

Appendix Two

Update to residential property leases occupied by members of the Royal family since 2005

Appendix Three

New residential property leases with members of the Royal family since 2005

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