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Less than a month before she is due to deliver the budget, Rachel Reeves has admitted breaking rules by failing to apply for a licence from her local council before letting out her south London home. Keir Starmer has accepted an apology from Reeves, declared the matter closed and insisted that a fuller investigation isn’t necessary – but the Conservatives are calling on the chancellor to resign. What has she done and how serious are things for her? What has Rachel Reeves done wrong? After Labour won the election last year and Reeves became chancellor, she and her family moved into 11 Downing Street. In September 2024 she let out her family home in Dulwich, south-east London, for a reported £3,200 a month. The Daily Mail revealed on Wednesday night that Reeves needed a licence to do so – and had failed to obtain one. Why did she need a licence? Local authorities in England have the power to require landlords to obtain a licence before renting homes in their areas. The rules, introduced by the 2004 Housing Act, are intended to help councils tackle problems in their areas such as poor housing conditions, low demand, deprivation, antisocial behaviour and crime. Under changes made by the Labour government in December last year, councils no longer need to apply for permission from central government to introduce these licensing schemes. Southwark council, where Reeves’s home is located, operates a selective licensing scheme of this kind. This was first introduced in 2021 and extended to cover the area where Reeves’s house is located in 2023. It requires any landlord letting out a property to obtain a licence costing £945, by submitting documents proving the house is fit for purpose including gas, electrical and fire safety certificates. What are the consequences of not buying a licence? Southwark council’s website states that “you can be prosecuted or fined if you’re a landlord or managing agent for a property that needs a licence and do not get one”. It operates a “rogue landlord” register of people who have been fined for breaking the rules. Failing to obtain a licence is a criminal offence punishable with an unlimited fine on prosecution, a fine of £30,000 as an alternative to prosecution, or an order to pay back up to 12 months in rent. What has the chancellor said? Reeves’s spokesperson said she had made an “inadvertent mistake”. She let out her home through a letting agent and was not made aware of the requirement before Wednesday. “As soon as it was brought to her attention she took immediate action and has applied for the licence,” they said. The chancellor referred herself to the independent adviser of ministerial standards and the standards commissioner. She has written to Keir Starmer to apologise. What has the prime minister said? Starmer met Reeves on Wednesday evening after the matter came to his attention. In a letter to her afterwards, he said he had consulted the adviser on ministerial standards who advised him that “in light of your prompt action to rectify the position, including your apology – further investigation is not necessary”. He added that Reeves was “treating this matter with the urgency and seriousness it deserves” and that he was satisfied it could be drawn to a close after her apology. He pointed out that the ministerial code states that in certain circumstances, an apology is enough. What are the Conservatives and Liberal Democrats saying? Opposition parties have been less forgiving. The Conservative leader, Kemi Badenoch, said the error made the chancellor’s position “extremely tenuous” and called for the prime minister to launch a full investigation. She accused the chancellor of having “spent months floating punishing tax hikes on family homes” while at the same time “profiting from illegally renting out her house”. Priti Patel, the shadow foreign secretary, went further and said Reeves should be sacked. The Liberal Democrat deputy leader, Daisy Cooper, said that “this latest crisis needs investigating swiftly and thoroughly”. How bad is this for Reeves? The error is embarrassing and puts the chancellor’s financial arrangements under intense scrutiny. There will be questions about whether she sought the right advice before letting out her home – and whether her letting agent was at fault for not flagging the requirement. The timing of this disclosure, which has come less than a month before the budget, is very damaging. If any other breaches emerge, in relation to this property or anything else, it could quickly spiral into a full-blown crisis for Reeves. She has previously faced scrutiny over her CV and expenses while she was working at a bank before entering politics. But No 10 has moved to quickly shut down the row. Keir Starmer swiftly backed Reeves, saying that he has been advised by his standards adviser that a full investigation was not necessary. There will be questions about how and why he came to that conclusion, but if it holds, it boosts the likelihood that Reeves will weather the controversy. What does this mean for the government? Immediate comparisons have been made to Angela Rayner, who was forced to resign in September for not paying enough stamp duty when buying a flat in Hove. Rayner’s breach was more serious, and she was found by the standards adviser to have broken the ministerial code. Significantly, she failed to seek further the expert tax advice that had been recommended to her. Be that as it may, the latest controversy contributes to a sense of one scandal after another for Starmer’s government, and ultimately damages the prime minister who put ethics and integrity at the heart of his offer to voters.
