William and Kate and their new baby will move into the Kensington Palace apartment, the former residence of Princess Margaret, when repairs are completed. They currently live in another part of Kensington Palace.
Royal aids said the "vast majority" of the renovations were for the removal of asbestos, which would have been necessary, "whoever moved into the building."
Palace sources said the interior decorating costs were paid for out of the royal family's private income.
The Historic Royal Palaces have used the space for office and storage space since Princess Margaret died in 2002.