As UK mourns Queen Elizabeth, Crown ownership empire highlights continuity and change

On an autumnal September day of sunshine and showers in the British capital, as news of Queen Elizabeth II’s death broke, shoppers on London’s Regent Street strolled through the shops and workers lined up rushed to and from the offices that are at the heart of the British monarchy’s extensive and uniquely structured real estate empire.

Commercial property plays a huge role in the funding of the royal family and in the monarchy’s relationship with British public finances. Queen Elizabeth’s 70-year reign saw some changes in how this relationship worked, and her final years saw the establishment of a renewable energy business that would soon become the most valuable part of the crown’s portfolio.

As the UK mourns the Queen, who died on Thursday, September 8, the Crown’s portfolio will continue, underscoring the continuity inherent in a relationship between monarch, land and country that dates back nearly a thousand years.

The Crown Estate is a real estate company like perhaps no other in the world. It is made up of assets owned by the reigning British monarch and managed by an independent board of directors. the profits go to the British Treasury. Until his death, the Queen and Royal Family, now the King and Royal Family, then received a fixed percentage of the profits generated by the estate, called the Sovereign Grant. This figure is currently at 25%, which means that in 2021 the Queen has received £78million. It was increased by 15% a few years ago to pay for repairs to a fairly famous residential property, Buckingham Palace. The payout ratio is reviewed every five years by the Prime Minister, Chancellor of the Exchequer and Custodian of the Privy Purse, which manages the monarch’s finances.

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Queen Elizabeth II

The Crown Estate traces the ownership of its portfolio back to the time of William the Conqueror, King of England from 1066 to 1087. During 700 years of upheavals which included the Wars of the Roses, the Reformation initiated by Henry VIII and the English Civil War. , the British monarch retained ownership of the portfolio, using it to generate revenue to finance the running of the state and regular wars, or donating land to purchase the support of the nobility.

In 1760 George III decided it would be a better deal if he exchanged the income from the estate for a fixed annual payment from Parliament, called the Civil List. This arrangement lasted until 2011, when the Civil List and other public payments to the British Monarchy were consolidated into the Sovereign Grant.

George III decided to make the exchange partly because the Crown Estate had gradually become smaller and smaller. This is not the case today. A specific company was set up to manage the estate in 1955, three years after Queen Elizabeth became monarch, and at the end of 2021 the company’s portfolio was valued at £15.6 billion, and it includes the entirety of London’s famous Regent Street, the park around Windsor Castle and a portfolio of regional retail assets.

It also owns a huge part of the UK’s offshore wind sector: The Crown Estate owns most of the UK’s seabed out to a distance of 12 nautical miles. The value of this portfolio was £5 billion at the end of 2021, a growth of 22% on the previous year, making it the fastest growing part of the Crown Estate holdings. Even if that growth slows, it will soon overtake the £7.7 billion London portfolio as the largest division. The marine portfolio created 10.78 gigawatts of renewable energy last year.

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Bisnow/Mike Phillips

Buckingham Palace on September 8, 2022, shortly before the announcement of Queen Elizabeth’s death

Over the past 10 years, the company has paid £3bn to the Treasury and achieved a total return of 6% last year.

No inheritance tax is paid on the estate; when one monarch dies and the next takes over, the arrangement simply continues.

The Duchy of Lancaster is the private domain of the British sovereign, formerly the Queen and now the King.

The duchy was created when Henry III gifted the baronial lands of Simon de Montfort to his son, Edmund, in 1265. Henry then consolidated this with the land of another nobleman, Robert Ferrers, Earl of Derby, and part of his own land.

At the end of March 2022, the Duchy of Lancaster had £652.8m of net assets under its control, delivering a net surplus, essentially a profit of £24m. These take the form of real estate and financial assets. Of this portfolio, 57% is commercial property, 26% agricultural property, and a further 8% in residential property.

Its largest commercial asset is the Savoy Estate, a London block which includes The Savoy hotel, although the Duchy does not own it. The Savoy forms the western boundary of the block, with The Strand to the north, The Embankment to the south and Somerset House to the east.

The Queen owned two private estates, Balmoral in Scotland and Sandringham in Norfolk in the east of England.

Buckingham Palace is not private property, but is occupied by the monarch and held in trust by the Crown, so it will always pass from monarch to monarch. The Sovereign Grant was increased in 2017 to pay the palace’s £369million renovation bill.

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Bisnow/Mike Phillips

The Savoy Estate, private property of the Duchy of Lancaster

The private heir to the throne is the Duchy of Cornwall. The duchy was created by Edward III in 1337 to provide an income for his son, Edward the Black Prince. It was the first English duchy to be created and is traditionally inherited by the Prince of Wales, the monarch’s eldest son. In this way, Prince Charles was Duke of Cornwall and the Duchy’s income was used to fund his life, with the Duchy now likely to pass to Price William. When Charles took the duchy in 1973, as part of his feudal rights, he received a pair of white gloves, golden spurs and greyhounds, a pound of pepper and cumin, a bow, 100 silver shillings, wood for his fires and a salmon spear. .

More useful is the £1billion in net assets the Duchy had at the end of March, producing a net surplus Charles could draw on of £23million – he can only receive portfolio income , not proceeds from asset sales.

The Duchy does not own all of Cornwall, just a large part of it, and not all of its assets are in the county, in fact they are spread across 23 UK counties. In total, he owns 52,450 hectares of land, 2,830 hectares of woodland, £345 million of commercial properties, including the Oval cricket ground in London, and £58 million of land for development.