The Duke and Duchess of Sussex struck a deal with Buckingham Palace to pay no further rent on Frogmore Cottage after refunding the £2.4 million taxpayers paid for its refurbishment, The Mail on Sunday can reveal.
It had been reported that the Sussexes would pay a 'commercial rate' for the five-bedroom mansion on the Windsor estate. But Palace officials last night confirmed that the lump-sum payment wiped out the couple's rental obligations as the increased value of the property following the work was taken as 'rent in lieu'.
It's estimated the property would cost between £150,000 and £230,000 a year to rent, which means that the Sussexes may have saved up to £690,000. They will not renew their lease when it ends later this month.
A Palace spokesperson said: 'The Duke and Duchess of Sussex made a contribution of £2.4 million to the Sovereign Grant which covered the refurbishment of Frogmore Cottage. They have fulfilled their financial obligations in relation to the property.
'In line with usual practice for the Sovereign Grant report, the accounting treatment was scrutinised and signed off by the National Audit Office and the Treasury. As with any such agreement between landlord and tenant, further details regarding the Sussexes' tenancy arrangements would be a private matter.'
But last night one critic reacted angrily to the emergence of the deal.
Norman Baker, a former Cabinet Minister and Privy Counsellor, said: 'It is outrageous that Harry and Meghan should be able to live in a huge house on these terms while regular people struggle to put food on the table.' He is now demanding to know how many Royal Family properties are rented out below the market rate.
Buckingham Palace announced in November 2019 that the Sussexes would have Frogmore Cottage as their official residence. They moved in the following spring after renovation work transformed it from a series of separate cottages into one large family home.
But when they stepped back from Royal duties to become 'financially independent', Buckingham Palace released a statement saying it was Harry and Meghan's 'wish to repay Sovereign Grant expenditure for the refurbishment of Frogmore Cottage, which will remain their UK family home'.
They quit Royal duties officially in March 2020 and a Palace spokesman told the BBC they would continue to pay a 'commercial rate' of rent on the property.
In fact, they paid five months' rent but then gave a £2.4 million lump sum in September to cover the refurbishment costs. Today we can reveal that a deal was agreed in which the payment wiped out any further financial obligations.
It was not a deal which was publicly announced by the Palace. Nor was it easy to see by looking at the official Sovereign Grant reports which outline public spending on the monarchy. Last night Buckingham Palace confirmed that the £2.4 million was split into three headings and recorded across two sets of accounts. In the 2020/21 figures, the lump sum is listed as both 'rental income' and as 'recharges for functions and other income'.
The following year, the third and final part of the lump sum appeared in the accounts as 'deferred income under current liabilities'.
A leading accountant, who asked not to be named, analysed the accounts for The Mail on Sunday.
He said: 'This is an accountant's way of balancing the books. They will look at this deal and say 'Yes, but there's still value being had from the rental contract'. So there needs to be value seen in the accounts. By allowing the Sussexes to remain in Frogmore Cottage without any additional payments, the Crown gave away value and, as such, should recognise that. They use some of the £2.4 million for that.
'That is why they will have split the payments, to show value coming back into the estate according to the rental agreement that the Sussexes will have signed.'
The Royal Family is funded with public money from the Government known as the Sovereign Grant. The system was set up in April 2012 to replace the old Civil List and requires the Royal Household to publish a full report on its public finances each year. Similar to other Government expenditure, it is subject to scrutiny by the National Audit Office and the Public Accounts Committee.
The Royal Household has said it is 'committed to making Royal finances as transparent as possible'.Read more 2023-03-18T22:13:20Z dg43tfdfdgfd