Andrew Mountbatten-Windsor’s lease of Royal Lodge and his ability to sublet the estate’s properties offered “best value” when the arrangements were first put in place, MPs have been told.
The Crown Estate faced a Commons committee hearing on Monday when its chief executive was quizzed on the disgraced ex-duke’s former accommodation.
The late Queen’s second son Andrew received an undisclosed private income from subletting three cottages on his Royal Lodge estate while paying a peppercorn rent for more than two decades, a National Audit Office investigation revealed last month.
The payments came to light after Andrew, who was stripped of his titles over his links to paedophile Jeffrey Epstein, was forced to vacate his home and move into Marsh Farm on the King’s Sandringham estate in Norfolk, amid public outcry about the rent he paid.
His leasehold agreement revealed he paid £1 million for the lease and that since then he paid “one peppercorn” of rent “if demanded” per year.
He was also required to pay a further £7.5 million for refurbishments completed in 2005.
Dan Labbad, chief executive of the Crown Estate, told the Public Accounts Committee (PAC): “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.”
He added of the subletting: “Those potential income streams were taken into account in determining what best value was at the time.”
The evidence session was held as part of the PAC’s inquiry into the management and governance of the Crown Estate and associated properties.
Mr Labbad insisted subletting was “reasonably common” in the property industry for long leaseholds, and an independent valuation was undertaken during the governance process when Andrew took over the estate’s lease more than 20 years ago, with the potential income from subletting taken into account.
“The governance process that led to the arrangements at Royal Lodge in 2003 was such that a whole range of things were looked at – the premium, the refurbishment needs that would have otherwise been a Crown Estate cost, and a whole host of other elements…” Mr Labbad said.
“Within that, subleasing of the cottages was part of the independent valuation that informed both the consideration and the value for money requirements being satisfied.”
Mr Labbad was questioned on how much Andrew made from the subletting, but he said he did not have that information, and that it was a matter for the former duke as the tenant.
But James Chalmers, the King’s keeper of the privy purse and treasurer who was also appearing as a witness, suggested the royal household would be able to obtain the figure.
Mr Chalmers said: “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.”
Chairman of the PAC Sir Geoffrey Clifton-Brown told Mr Chalmers it could be arranged for the royal household to provide the amount in confidence to the NAO if they did not want the figure to be “more widely shared”.
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