The monarch's disgraced brother was due a payout of Stg558,000 ($A1.1 million) from the Crown Estate after agreeing to quit the 30-room mansion amid the furore over his friendship with convicted pedophile Jeffrey Epstein.
But a royal source admitted there was "a lot of work that needs doing" to the property in Windsor Great Park, and the cost of repairs is likely to affect the amount of compensation he receives, The Daily Telegraph newspaper reported.
The former prince will, however, receive a one-off, six figure payment to cover his move, plus an annual stipend privately funded by the King to prevent him from "overspending in his new life as a commoner".
The annual payment will be worth several times his Stg20,000 ($A40,088)-a-year Navy pension, The Guardian newspaper reported.
It is understood the King will use private funds to cover the cost, but not his Duchy of Lancaster income.
The King receives an annual private income of more than Stg27 million ($A54 million) from the duchy, an ancient portfolio of land, property and assets which is held in trust for the sovereign.
Andrew will move to a smaller home on the King's private Sandringham estate in Norfolk in the new year, completing his internal exile, after agreeing to quit Royal Lodge, where he had paid a peppercorn rent for more than 20 years.
Charles dramatically stripped his younger brother of his prince and Duke of York titles on Thursday, cementing his banishment from public life.
Andrew had tainted the reputation of the royal family over his association with Epstein and, for many years, has been dogged by allegations he sexually abused Virginia Giuffre after she was trafficked by the financier.
He has strenuously denied the allegations.
The King had long tried to encourage Andrew, who shared Royal Lodge with his ex-wife, Sarah Ferguson, to move out, but he had signed a watertight, 75-year lease on the property in 2003.
His leasehold agreement revealed he paid Stg1 million ($A2 million) for the lease and that since then he paid "one peppercorn" of rent "if demanded" per year.
He was also required to pay a further Stg7.5 million ($A15 million) for refurbishments completed in 2005, and the agreement contained a clause that stated the Crown Estate would have to pay him about Stg558,000 if he gave up the lease.
Under the terms of the lease, Andrew had to ensure the exterior of the mansion was repainted with two coats of paint every five years and the outside stone and cement work was cleaned.
He also had to repaint the interior every seven years as well as "paper polish decorate" and treat the inside of the seven-bedroom home respectfully.
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