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Chancellor Rachel Reeves has admitted breaching housing rules by unlawfully renting out her family home without a licence.
Reeves and her husband used a lettings agency to rent out the family home in London’s Southwark borough after they moved into a flat in Downing Street following Labour’s general election victory last year, according to people familiar with the matter.
They added the chancellor did not receive advice that a rental licence was required. But Southwark council, like many local authorities, requires private landlords to obtain a “selective” licence to rent out property in certain areas.
Reeves’ error comes at a critical time for her and the government, as she prepares what is expected to be a tax-raising Budget on November 26, with Labour trailing in opinion polls.
Labour MPs privately expressed dismay at Reeves’ error, drawing parallels with former deputy prime minister Angela Rayner, who was forced to resign last month after failing to pay the correct stamp duty on a property.
Reeves has informed Sir Keir Starmer, as well as the prime minister’s independent ethics adviser and the parliamentary commissioner for standards, according to her spokesperson.
In a letter to Starmer, Reeves said she was not aware a licence had been required for renting out the family home.
“This was an inadvertent mistake. As soon as it was brought to my attention, we took immediate action and have applied for the licence,” she added, saying she “sincerely apologised” for the error.
Starmer responded in a letter to Reeves that while it was “regrettable” she had not sought the correct licence, he had concluded an apology was sufficient after consulting with the ethics adviser Sir Laurie Magnus.
“The ministerial code makes clear that in certain circumstances, an apology is a sufficient resolution . . . I am satisfied that this matter can be drawn to a close following your apology,” Starmer said.
The Daily Mail, which first reported the story, said Reeves had put her four-bedroom detached family home on the market at a monthly rent of £3,200 last year.
A Conservative spokesman demanded Starmer sack Reeves, saying: “Rachel Reeves has broken the law and broken the ministerial code, but Keir Starmer is too weak to sack her.
“While the chancellor is planning tax hikes for millions of families across the country at the Budget, it’s one rule for the chancellor and another for everyone else.”
Daisy Cooper, Liberal Democrat deputy leader, said Reeves’ error risked “undermining confidence” in the government.
“The chancellor is meant to be delivering growth but the only thing she appears to be growing is the government’s list of scandals,” Cooper added.
Reeves’ error is particularly embarrassing for her because she has been a supporter of selective licensing by councils.
She praised Leeds city council’s decision to expand its selective landlord licensing policy in the Armley area of her Leeds West and Pudsey constituency just 10 days ago.
“While many private landlords operate in the right way, we know that lots of private tenants in Armley face problems with poorly maintained housing,” she said at the time.
Labour is trailing far behind Reform UK in the polls. The latest YouGov survey has Reform on 27 per cent, with Labour and the Conservatives tied on 17 per cent.
Some Labour MPs have suggested Starmer’s position is increasingly vulnerable ahead of Scottish and Welsh parliamentary elections, and local polls in England, next May.