For most people, paying the rent on time is one of their most important financial priorities. Fall into arrears and you can get evicted. Yet it has been reported that Prince Andrew hasn’t paid rent on the ‘Royal Lodge’, the huge mansion where he lives, for more than 20 years. How does he get away with it?
The answer is, while he rents the Royal Lodge from the Crown Estate, his lease is quite different to the assured shorthold tenancies that are common for most private sector tenants.
Instead of paying a substantial rent each month, most of the costs of his lease were paid up front in 2003: £1 million in cash together with an agreement to fund repairs and renovations which eventually cost £7.5 million. In return for this he has the right to live there until 15 June 2078.
He does still have to pay rent but this is symbolic or “nominal” rent. The reason for this is that English law thinks both sides need to get something out of an agreement for it to be legally binding, even if what one side is getting is just symbolic.
In Andrew’s case the nominal rent is “one peppercorn”. Why not £1? The answer to this is historic. In the Middle Ages tenants often had to pay their rent in goods rather than money (e.g. providing grain, cows or beer). So when people looked for a symbolic item they chose the least valuable item they could think of: a peppercorn.
Both peppercorn rents and these long leases, sometimes called leaseholds, have long been common in commercial and higher-value property. Leasehold has also been used by property developers for normal homes in more recent decades, where abuses of the system involving the charge of substantial rather than symbolic rents has resulted in various legal reforms.
