In 1539, Edward Seymour, 1st Earl of Hertford (1500 - 1552), obtained a grant of land at Chester Place, outside Temple Bar, London from his brother-in-law King Henry VIII. When his nephew the young King Edward VI came to the throne in 1547, Seymour became Duke of Somerset and Lord Protector.

In about 1549 he pulled down an old Inn of Chancery and other houses that stood on the site, and began to build himself a palatial residence, making liberal use of other nearby buildings, including some of the chantry chapels and cloisters at St Paul's Cathedral, which were demolished partly at his behest as part of the ongoing dissolution of the monasteries. It was a two-storey house built around a quadrangle, with a gateway rising to three storeys, and was one of the earliest examples of Renaissance architecture in England. It is not known who designed the building, known as Old Somerset House.

Before it was finished, however, the Duke of Somerset was overthrown, attainted by Parliament and in 1552 was executed on Tower Hill. Somerset Place, as the building was referred to, then came into the possession of the Crown. The duke's royal nephew's half-sister, the future Queen Elizabeth I, lived there during the reign of her half-sister Queen Mary I (1553–58). The process of completion and improvement was slow and costly.

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