Buckingham Palace could continue to function as official royal residence in London for the royals. It functions well as an office for with apartments for the most senior members of the royal family.
Centralising the courts / households in one place has a lot of financial advantages, improves communication and cooperation, reduces competition for media attention and press manipulation.
In 1955 a Government Committee under the Chairmanship of Sir Malcolm Trustram Eve recommended that to avoid confusion between Government property and Crown land, the latter should be renamed The Crown Estate and should be managed by an independent board. These recommendations were implemented by the Crown Estate Acts of 1956 and 1961, which established The Crown Estate as it is today.
https://www.thecrownestate.co.uk/en-gb/about-us/our-history/
Kensington Palace, along with the Tower of London Hampton Court Palace the Banqueting House Kew Palace and Hillsborough Castle, are run by Historic Royal Palaces. On 1 April 1998, Historic Royal Palaces became an independent charity by Royal Charter with a Board of Trustees. Historic Royal Palaces has a contract with the Secretary of State to manage the palaces. Historic Royal Palaces Enterprises Ltd was set up to manage all of the organisation’s trading activities.
https://www.hrp.org.uk/about-us/history-of-historic-royal-palaces/#gs.rhv76s
The Occupied Royal Palaces are held in trust for the nation by the Sovereign. Their maintenance and upkeep is one of the expenses met by the Government in return for the surrender by the Sovereign of the Hereditary Revenues of the Crown (mainly the profit from The Crown Estate. The Occupied Royal Palaces are Buckingham Palace, St James’s Palace, Clarence House and Marlborough House Mews, the residential and office areas of Kensington Palace,the Royal Mews and Royal Paddocks at Hampton Court, and
Windsor Castle and buildings in the Home and Great Parks at Windsor.
https://webarchive.nationalarchives.gov.uk/ukgwa/20130102201041/http://www.hm-treasury.gov.uk/leg_sovereign_grant_faq.htm
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