The King, the Duke and the affair of the Royal Lodge

In the past few weeks there has been extensive press reporting of the King’s desire to move his younger brother Prince Andrew, Duke of York from his current residence Royal Lodge to the rather less grand Frogmore Cottage, former UK residence of the Duke and Duchess of Sussex.  Royal Lodge is a grade II listed, seven bedroom country house in Windsor Great Park which has been Prince Andrew’s home for 20 years.

The Duke’s landlord is the Crown Estate, which is not in the control of the King, but if the Crown Estate were persuaded to take up the fight to evict the Duke there is a problem which has to be addressed. The Duke has something underpinning his residency of the lodge; he has a lease.

The lease of Royal Lodge was granted in August 2003 for a term of 75 years, and the Duke paid a premium of £1m to the Crown Estate to secure it. He also agreed to undertake renovation works to the property within two years costing, in 2023 terms, £13m. While he occupies the property at a peppercorn rent, he cannot assign the lease to anyone other than his widow or his daughters and he cannot sub-let at all. The bargain both the Duke and the Crown Estate struck in 2003 was clearly intended to secure a residence for the rest of the Duke’s life.

All this being the case, the King has a problem. Either an agreement must be reached with the Duke to surrender the lease, or grounds must be found to terminate it. Upon the assumption that the Duke is not prepared to surrender his lease what might his landlord do?

On 20 May 2023, The Times published a quote from Tom Bower, a biographer of the King as follows “What the King is saying is he won’t pay for the maintenance. All crown leases have termination clauses, for example if you’re not paying for upkeep in a way they think is desirable. So I would think that the lease won’t protect him forever….That’s how he can be winkled out.”

Of course, termination clauses are not restricted to crown leases but it is indeed the case that the Duke’s repairing covenant is expressed by reference to the terms of a maintenance manual which reflects the prominent nature of the property and also the fact that the Royal Chapel, to which the royal family has access is located on the grounds of Royal Lodge. So it is right to say that the Duke is obliged to maintain the property in good order and that he will be in breach of his repairing covenant if he fails to do so. It is also right that, if the Duke breaches the terms of his lease then it is subject to forfeiture.

However, the Duke may benefit from a piece of legislation to which the King’s grandfather gave royal assent, namely, the Leasehold Property (Repairs) Act 1938.

The 1938 act applies to leases of at least seven years with more than three years left to run and constitutes a significant stumbling block on any attempt by a landlord to forfeit a lease, or claim damages for breach of the repairing covenant. The act was intended to prevent landlords from worrying tenants by threatening forfeiture over trivial breaches of the repairing covenant and it does so very effectively. It provides that, where a landlord serves a section 146 notice, that notice must inform the tenant of the possibility of claiming the protection of the 1938 act and, if the tenant does so by counter-notice, then forfeiture cannot be effected without the permission of the court. The court may only grant permission on five grounds, paraphrased here for brevity:

1. The work is required to prevent a loss in value of the landlord’s freehold interest, or in recognition that a loss in value has already arisen.
2. The work is required by law, either by statute or local bye-law.
3. That the tenant is in occupation of part and the work is required to protect another occupier.
4. That it will be relatively cheap to do the works now compared to what it will cost if the works are not done.
5. There are special reasons that exist that make it fair to grant permission.

It is not possible, without engaging in speculation, to say definitively what chances there might be of securing permission to forfeit but suffice to say that the 1938 act has proved to have a chilling effect upon enforcing repairing covenants by forfeiture, which perhaps explains why the act is so rarely litigated. It is fair to say that, until the state and condition of the lodge is quite parlous, it may well be prohibitively difficult to consider forfeiture as a way that the Duke can be “winkled out”. He has a lease and he paid a lot of money for that lease. The court will not lightly countenance relieving him of his property interest unless the Crown Estate can show that one or more of the five grounds above applies.

Tim Foley is a property litigation partner and Lisa Goodrich is an associate at Freeths