Princess Michael of Kent, who is married to the Queen's cousin, says she lobbied for William and Kate to be given Princess Margaret's apartment because Diana's ghost would "give Kate the wobblies" if the couple took over her old place.
"I thought she (Kate) would get the wobblies," Princess Michael tells the January issue of Tatler magazine. "You know, with the ghost of Diana.
"Anyway, that apartment is not the best whereas Princess Margaret's is wonderful – huge private garden."
Princess Michael also predicted Prince Harry would soon be William and Kate's next-door neighbour.
She says Harry will likely move into the flat currently used by the Duke and Duchess of Gloucester.
"Then they would be next door to each other," she says. "It would be a very good move."
Harry currently lives in the two-bedroom Nottingham Cottage on the grounds of Kensington Palace, where William and Kate lived until they moved into their new 20-room apartment.