Rachel Reeves tonight backtracked in her ‘illegal letting’ row after she admitted she was told she needed a licence before renting out her family home.
In a second letter to the Prime Minister in the space of two days, the Chancellor wrote to ‘update’ Sir Keir Starmer over the blunder that has plunged her into jeopardy.
She said the letting agency and her husband had found correspondence from last July in which they discussed the need for a rental licence.
‘The letting agent said to my husband that a Selective Licence would be required and agreed that the agency would apply for the licence on our behalf,’ Ms Reeves wrote.
But this contradicted the previous letter she sent Sir Keir on the matter on Wednesday night, in which she stated: ‘We were not aware that a licence was necessary.’
Ms Reeves’ admission will likely increase demands for the PM’s independent ethics adviser, Sir Laurie Magnus, to launch an investigation into the row.
In her letter on Thursday night, the Chancellor said she had shared emails between her husband and the agency with Sir Laurie and was ‘happy to answer any further questions required’.
It came amid claims the Chancellor could be forced to hand back tens of thousands of pounds to tenants after renting out her family home without a rental licence.
A Downing Street spokesman said: ‘Following a review of emails sent and received by the Chancellor’s husband, new information has come to light.
‘This has now been passed to the Prime Minister and his independent adviser. It would be inappropriate to comment further.’
But No 10 added that Sir Keir Starmer continued to have ‘full confidence’ in Ms Reeves and guaranteed she will deliver the Budget on November 26.
The emails are expected to be published later on Thursday.
The Chancellor is struggling to contain a furious backlash over the blunder uncovered by the Daily Mail, despite the PM desperately trying to prop her up.
Tory leader Kemi Badenoch said: ‘This whole thing stinks. The PM needs to stop trying to cover this up, order a full investigation and, if Reeves has broken the law, grow a backbone and sack her!’
Ms Reeves failed to obtain a landlord licence when she placed her family home in Dulwich, south London, on the rental market last year as she moved into 11 Downing Street.
Southwark Council has vowed to crack down on unlicensed letting, with its website advising tenants that they can get money back.
It appears that could be up to £38,000 in the case of Ms Reeves – who has enthusiastically backed similar landlord licences in her own Leeds constituency.
Yet Southwark Council indicated the Chancellor is unlikely to be fined as it suggested enforcement action is reserved for landlords who ignore warning letters about not having a licence.
There was some further relief for Ms Reeves on Thursday evening when the lettings agency involved in her rental arrangements appeared to take responsibility for the error.
Gareth Martin, owner of Harvey Wheeler, revealed his firm had apologised to the Chancellor and her husband for the ‘oversight’.
‘Our clients would have been under the impression that a licence had been applied for,’ he added.
‘Although it is not our responsibility to apply, we did offer to help with this. We deeply regret the issue caused to our clients as they would have been under the impression that a licence had been applied for.’
Despite previous cases going to court, Sir Keir insisted the matter was closed within hours of the news breaking.
The PM on Wednesday night said further investigation was ‘not necessary’ after receiving an apology from Ms Reeves and consulting his ethics adviser, Sir Laurie Magnus.
But, on Thursday afternoon, Downing Street dramatically reopened the prospect of Sir Laurie launching a formal probe into Ms Reeves’ rental arrangements when revealing the ‘new information’ was being looked at.
Ms Reeves’ husband, Nicholas Joicey, is a senior official at the Department for Environment, Food and Rural Affairs.
He is currently on a one-year secondment at the Blavatnik School Of Government in Oxford.
Rachel Reeves’ husband, Nicholas Joicey, is a senior official at the Department for Environment, Food and Rural Affairs
The Chancellor failed to obtain a rental licence when she placed her family home in Dulwich (pictured) on the rental market last year as she moved with her family into 11 Downing Street
Ms Reeves put her four-bedroom detached house on the market for £3,200 a month last year, and her register of interests states she has received rental income since September 2024
As recently as this month, Ms Reeves was posting on X in support of letting licences in her own Leeds constituency
Southwark Council has vowed to crack down on unlicensed letting, with its website advising tenants that they can get money back
A spokesman for Southwark Council said: ‘Southwark Council requires private landlords to acquire a selective licence in order to rent out their homes if they live in specific areas.
‘This is in order to protect tenants and ensure landlords are complying with housing requirements, providing safe, well-maintained homes.
‘Selective licences are acquired by sending applications to the council, which we then assess and approve subject to conditions.
‘When we become aware of an unlicensed property, we issue a warning letter advising the landlord that they have 21 days to apply for a licence – enforcement action such as fines are reserved for those who do not apply within that time or where a property is found to be in an unsafe condition.
‘We cannot comment on individual cases.’
Downing Street declined to say whether Ms Reeves had broken the ministerial code during a bad-tempered briefing with political journalists this morning, but denied there had been a ‘stitch-up’ to avoid panicking the markets.
The Chancellor was ruthlessly mocked for the blunder in an AI-generated video branding her a ‘rent queen’ this morning – reminiscent of memes about former deputy PM Angela Rayner‘s failure to pay stamp duty.
Ms Reeves – who is less than a month from delivering a Budget that could seal the fate of the Labour Government – suggested that the letting agent had not advised her of the need for a licence.
In a round of broadcast interviews, Tory shadow chancellor Mel Stride warned that Ms Reeves’ position is ‘untenable’.
The Chancellor put her four-bedroom detached house on the market for £3,200 a month last year, and her register of interests states she has received rental income since September 2024.
Southwark Council, the local authority, requires that private landlords in certain areas – including the one where her house is located – obtain a ‘selective’ licence to rent out their property.
But last night she admitted that she was unaware of the licensing requirement and, following inquiries by the Daily Mail, applied for the licence.
After the story was broken on this website, a spokesman for Ms Reeves said: ‘Since becoming Chancellor Rachel Reeves has rented out her family home through a lettings agency.
‘She had not been made aware of the licensing requirement, but as soon as it was brought to her attention she took immediate action and has applied for the licence.
‘This was an inadvertent mistake and in the spirit of transparency she has made the Prime Minister, the Independent Adviser on Ministerial Standards and the Parliamentary Commissioner for Standards aware.’
The yield on 10-year gilts – a key element of government borrowing – nudged upwards this morning in an indication of jitters on markets.
The quick response by Downing Street looked to be partly an effort to dampen concerns about Ms Reeves’ fate.
Ms Reeves was ruthlessly mocked for the failure in an AI-generated video branding her a ‘rent queen’ this morning
The yield on 10-year gilts – a key element of government borrowing – nudged upwards this morning in an indication of jitters on markets
As recently as last week the Chancellor was posting on X in support of letting licences in her own Leeds constituency.
‘I welcome Leeds City Council’s decision to expand their selective landlord licencing policy to include the Armley area,’ she wrote on October 20.
‘While many private landlords operate in the right way, we know that lots of private tenants in Armley face problems with poorly maintained housing.
‘This scheme means private landlords in the area will be required by law to obtain a licence for any residential property they are seeking to let and must meet certain standards to ensure the property is safe and in a decent state of repair.’
Shadow chancellor Sir Mel Stride told Sky News that Sir Keir was attempting to ‘put this whole thing to bed with a quick exchange of letters’.
‘This was a Prime Minister who, when he came into office on the steps of Downing Street, talked about restoring the dignity and integrity of government … and if he’s to stand by his word, then I think he should be concluding her position is untenable,’ Sir Mel said.
He added: ‘It seems to me, not at all unreasonable to simply ask that there’s a proper investigation to have a look at all the aspects of this matter.’
Shadow foreign secretary Priti Patel said: ‘Labour-run Southwark Council boasts of ‘cracking down on’ and having a ‘zero tolerance approach to rogue landlords’ and have prosecuted landlords for renting unlicensed properties.
‘Rachel Reeves has made thousands from renting without following the licensing laws. Southwark Council must now take action on Rachel Reeves and prosecute her.’
Mrs Badenoch said the revelations were ‘very serious’.
‘If the Chancellor, who has spent months floating punishing tax hikes on family homes, has at the same time seemingly been profiting from illegally renting out her house, that would make her position extremely tenuous,’ she said.
‘The Prime Minister must launch a full investigation. He once said ‘lawmakers can’t be lawbreakers’.
‘If, as it appears, the Chancellor has broken the law, then he will have to show he has the backbone to act.’
Touring broadcast studios, policing minister Sarah Jones was asked if Ms Reeves should resign.
‘No, she shouldn’t,’ she told Times Radio.
‘She after the election, of course, moved into 11 Downing Street, as chancellors do. She has a family home in Southwark that she rented out through a letting agency. Now, Southwark Council has what’s called a selective licensing scheme.
‘Some boroughs have them, some don’t … The Chancellor wasn’t aware that she had to apply for this selective licence. As soon as she became aware, she rectified the situation.
‘She applied for that licence, and she told the Prime Minister, and she told the independent adviser on standards.’
It is understood Ms Reeves used an external lettings agency to rent out the house, and she did not receive any advice that a rental licence was required.
She took immediate action following the Daily Mail’s inquiries, and an application for the licence was submitted yesterday.
Southwark Council, like many other local authorities, requires that private landlords in certain areas obtain a ‘selective’ licence.
This has applied to most private residential properties rented to single families or unrelated tenants in the borough since November 2023.
There are few exemptions to requiring this type of licence – including if the property already has an HMO (house in multiple occupation) licence, is used as a holiday let or for religious purposes, or if the owner also resides in the property as their main home.
It is not thought that any of these apply to Ms Reeves.
The inside of the property is pictured. Failing to obtain a licence when required is a criminal offence
Southwark Council said the licences were brought in to ‘improve safety, security and quality for people living in private rented homes’.
They cost £900 and landlords must submit documents proving their property is fit for purpose, including gas, electrical and fire safety certificates, floor plans and tenancy agreements.
Failing to obtain a licence when required is a criminal offence and can be punishable with an unlimited fine on prosecution, a fine of £30,000 as an alternative to prosecution, or the landlord could be ordered to pay back up to 12 months’ rent.
Experts say the added red tape, alongside other requirements to be brought in under the Renters’ Rights Bill, is forcing some smaller landlords out of the sector.
Local estate agents said many landlords were not aware they needed a licence, particularly if they had been renting out properties before it became a requirement.
But some raised questions over how Ms Reeves could not have known, given that it appears she began renting out her property after the changes were brought in.
Southwark Council says it ’employs resources to find unlicensed properties and… may apply an enhanced application fee to cover the additional costs incurred in having to find the unlicensed property’.
Landlords have already lashed out at the Chancellor after she raised stamp duty on buy-to-let homes from 3 per cent to 5 per cent in her first Budget.
