PRINCE and Princess Michael of Kent will have to repay a loan of at least £2m when they sell their Cotswolds home.

Land Registry documents reveal that the couple remortgaged Nether Lypiatt Manor, in Bisley, Gloucestershire, a few months before putting it on sale for £6m in May last year.

In February the couple were forced to drop their asking price by £500,000 to £5.5m after failing to attract a buyer.

The mortgage, taken out with Coutts in September 2004, is clocking up interest charges of at least £100,000 a year, even if it is at a highly competitive rate of 5%.

The couple decided to sell Nether Lypiatt — which they bought in February 1981 for £259,745 — after the Queen told them she would not pay the reported £125,000-a-year rent on their London apartment at Kensington Palace beyond 2009.

In an interview last spring Princess Michael spoke of her upset at the decision, which came after parliamentary criticism of the couple’s privileged arrangement. MPs described the couple as “squatters” after it emerged that the Queen was letting them live in the apartment for a peppercorn rent.

The princess said the couple had pinned their hopes on staying on at the palace. “Having been given the Kensington Palace apartment for life, I assumed we would live the rest of our days there and I thought we would sell this [country] house . . . and that would be our income. The shock is that we’ve lost our old-age pension because we can’t do that any more.”

Damien Hirst, the artist, reportedly viewed the manor house before opting for a gothic pile in Somerset instead. Noel Edmonds, the game show presenter, also viewed it but decided not to make an offer.

A spokesman for the prince and princess refused to talk about their finances but insisted that potential buyers remained interested in Nether Lypiatt.

The house was built in 1703 and has eight bedrooms, five reception rooms, two cottages and stables and comes with 36 acres of countryside. The couple moved in the day after the wedding of the Prince and Princess of Wales in 1981.

Explore UK News

• Crime News

• Education News

• Health News

• Scotland News

Times Recommends

• Milk: do we need a dairy godmother?
• DIY: the women doing it for themselves
• First double portrait of Princes unveiled