The Prince of Wales has put his charitable foundation under strain after agreeing a bad property deal that is now draining funds away from his other good causes, it has been disclosed.
A £20million loan taken out in 2007 to help save Dumfries House, in Ayrshire, Scotland, for the nation has left the Prince’s Charities Foundation a victim of the property market crash.
The £43million purchase of Dumfries House has saddled the foundation, which is supposed to channel money into his charities, with a multi-million debt.
The security for the loan was supposed to be land for which the Prince wants to build a model eco-village – but its value has since collapsed to less than £9million from an estimated £15million.
The Prince had hoped to sell this new development to pay off the bulk of the outstanding debt.
Now the foundation has admitted it has already had to stump up £5million – which could have gone to other worthy causes – in a bid to reduce the debt.
Some of the Prince’s advisors have admitted the £43million purchase of Dumfries House may have been somewhat ‘rash’. In fact, the Prince bought Dumfries House without even seeing it.
Sir Michael Peat, the Prince’s principal private secretary, issued a statement saying: ‘We thought carefully about it because the risk has partially gone wrong. We were a little unlucky.
‘We did not spot the crash in development land prices. We were not the only property developer caught out by the property crash. But we had three levels of cover for the risk: the property development, fundraising and income from the social enterprises.’
A Clarence House spokesman said: ‘There is no doubt that the Prince of Wales did take a risk in borrowing £20million to finance the acquisition of Dumfries House.
‘It was not only a question of the value of the land but whether the charity would get planning permission for the land at all.’
He added, however, that ‘His Royal Highness was determined that this important and wonderful asset should not be lost for future generations’.
The foundation has since used charitable income to reduce the debt by about £5million but remains badly exposed over the deal.
Prince Charles bought cheap farmland for housing development in a deal largely negotiated by Sir Michael.
The Prince’s Foundation for the Built Environment has drawn up ambitious plans for 770 homes, called Knockroon.
Modelled on Poundbury, the Prince hopes that the development, and the opening of Dumfries House to the public, will act as a catalyst to regenerate an economically depressed area of Scotland.
A senior aide admitted the £43million purchase of the house had left the foundation somewhat cash-strapped.
The Prince’s late intervention in negotiations to buy Dumfries House from the Marquess of Bute in 2007 was hailed at the time as the heritage ‘save of the century’.
He took out the loan to prevent the marquess from selling off the mansion and breaking up its unique furniture collection.
Sources close to Clarence House say the deal was negotiated at breakneck speed to stop the furniture being sent to Christie’s for auction and that the Prince had never even visited Dumfries House at the time.
Although there is no suggestion he ever sought personal gain from any property deal, the loan and speculative land acquisition have put the accounts of his charitable foundation under strain.
Its available reserves have a £4million deficit in the latest accounts.
A spokesman said: ‘The Prince is a charitable entrepreneur, and entrepreneurs take risks, but the risk are always measured and managed – Dailymail
