Harry and Meghan have agreed to stop paying rent while they live at Frogmore Cottage

The Duke and Duchess of Sussex have reached an agreement with Buckingham Palace not to pay any further rents for Frogmore Cottage after refunding the £2.4million refurbishment, The Mail on Sunday can reveal.

It was reported that the Sussexes would pay a “commercial price” for the five-bedroom mansion on the Windsor estate. But officials at the palace confirmed last night that the lump sum payment wiped out the couple’s rental obligations, as the property’s increased value following the works was seen as a “replacement rent”.

It is estimated that the property would cost between £150,000 and £230,000 a year to rent, meaning the Sussexes may have saved up to £690,000. They won’t be renewing their lease when it ends later this month.

A palace spokesman said: “The Duke and Duchess of Sussex made a £2.4million contribution to the Sovereign Grant which covered the refurbishment of Frogmore Cottage. They have fulfilled their financial obligations related to the property.

“In accordance with standard practice for the Sovereign Grant Report, the accounts have been audited and approved by the National Audit Office and the Treasury Department. As with any such agreement between landlord and tenant, further details of the Sussexes’ lease arrangements would be a private matter.’

It was reported that the Sussexes would pay a “commercial price” for the five-bedroom mansion on the Windsor estate (pictured).

The Sussexes may have saved up to £690,000 by not paying Frogmore’s full rent

The couple are pictured here in the kitchen at Frogmore Cottage

But last night, one critic reacted angrily to the emergence of the deal.

Norman Baker, a former cabinet minister and privy councilor, said: “It’s outrageous that Harry and Meghan can live in a huge house in these conditions while normal people struggle to put food on the table.” He now wants to know how many of the royal family’s properties are rented below market price.

Buckingham Palace announced in November 2019 that the Sussexes would have Frogmore Cottage as their official residence. They moved the following spring after renovation work had transformed it from a series of separate cottages into one large family home.

But when they stepped down from their royal duties to become “financially independent”, Buckingham Palace released a statement saying it was Harry and Meghan’s “desire to repay the Sovereign Grant expenses for the renovation of Frogmore Cottage, that her family home will remain in the UK”.

They officially quit their royal duties in March 2020 and a palace spokesman told the BBC they would continue to pay a “commercial rent” for the property.

They actually paid five months’ rent, but then gave a lump sum of £2.4million in September to cover refurbishment costs. Today we can reveal that a deal was agreed in which the payment nullified all further financial commitments.

It wasn’t a deal publicly announced by the palace. Nor was it easy to spot when looking at the official Sovereign Grant Reports, which outlined public spending for the monarchy. Last night Buckingham Palace confirmed the £2.4million was split into three sections and recorded in two accounts. In the 2020/21 figures, the lump sum is listed both as “rental income” and as “allocations for functions and other income”.

The following year, the third and final part of the lump sum appeared in the accounts as “accrued income under current liabilities”.

A senior accountant, who asked not to be named, analyzed the accounts for The Mail on Sunday.

Meghan can be seen in the episode of the Netflix documentary where the couple moved to Frogmore Cottage before having Archie

Harry and Meghan with baby Archie and his grandmother Doria

He said: “It’s an accountant’s way of balancing the books. They’ll look at that deal and say, “Yes, but the lease still has value.” So there must be value in the accounts. By allowing the Sussexes to remain at Frogmore Cottage without additional payments, the Crown was giving away value and should recognize it as such. They use part of the £2.4million for it.

“So they will have split the payments to show that value is returning to the property under the lease the Sussexes signed.”

The royal family is funded with public money from the government known as the Sovereign Grant. Set up in April 2012 to replace the old civil list, the system requires the royal household to publish a full report of its public finances each year. Similar to other government expenditures, they are subject to scrutiny by the National Audit Office and the Public Accounts Committee.

The royal household has said it is “obligated to make royal finances as transparent as possible”.