King Charles' brother is said to be in talks with the monarch's representatives about leaving Royal Lodge voluntarily following the furore over the "peppercorn" rent for the 30-room mansion, where he has lived for more than 20 years.
An anonymous source told The Sun newspaper that Andrew has requested the former home of the Duke and Duchess of Sussex, Frogmore Cottage, while Sarah may relocate to Adelaide Cottage after it is vacated by the Prince and Princess of Wales next month.
William, Kate and their children - Prince George, Princess Charlotte and Prince Louis - are due to move to Forest Lodge, an eight-bedroom Grade II-listed residence in Windsor Great Park.
A friend of Andrew and Sarah reportedly told The Sun: "No one is really sure how it's going to go down at the Palace yet. Andy is willing to leave but these are his demands."
"He is realistic and knows the writing is on the wall and that his time at Royal Lodge is up. If he must go, then he has asked for Frogmore Cottage.
"Incredibly Sarah has said she wants Adelaide Cottage.
"Sarah and Andy have lived together at Royal Lodge since 2008 despite being divorced and seen like they are still a married couple.
"It's incredible that they are willing to go their own separate ways. But it indicates that they have been under immense strain this year and need a break from one another. It's a fresh start for both."
The source further told The Sun the pair have set their eyes on two properties instead of one because Frogmore Cottage would be "too small" for both Andrew and Sarah.
"Frogmore Cottage is too small for both and Adelaide Cottage is around the corner so they will see each other whenever they want," the source told the newspaper.
"Both have space for their daughters Eugenie and Beatrice and their families to visit."
The King has long been said to have tried to encourage his younger brother, who lives in Royal Lodge with Sarah, to move out.
Charles reportedly first offered Frogmore Cottage to Andrew in January 2023 after Harry and Meghan moved out but the former duke turned it down.
Friends of the pair also reportedly stated Sarah "feels like she deserves a royal home to see out her years," The Sun said.
Andrew attempted to draw a line under years of controversy, following allegations he sexually abused Virginia Giuffre, by giving up his dukedom and other honours ahead of the publication of Giuffre's posthumous memoirs earlier this month.
But the prince, who strenuously denies the allegations, was instead swamped by criticism that has focused on the property he has lived in effectively rent-free since 2003.
Obstacles to reaching a settlement are reportedly where Andrew, eighth in line to the throne, will live and what financial recompense he will receive for the funds he spent renovating the home.
The government has so far refused to allocate time in the House of Commons for MPs to discuss Andrew's situation because the royal family wants parliament to focus on "important issues".
But the matter could be raised on one of the days when ministers are not in control of the parliamentary timetable.
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