Sir Keir Starmer has said Rachel Reeves will face no further action over her “inadvertent failure” to obtain a rental licence for her south London home.
It follows a turbulent 24 hours for the chancellor, in which she was accused of breaking the law and the Conservatives called for her to resign or be sacked.
In a letter published on Thursday night, the prime minister said correspondence shared by the chancellor “shows that the oversight regarding the licence occurred after your husband had been told by the estate agents that they would apply for a licence on his behalf”.
However, the application “did not occur”.
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Sir Keir continued: “It is clearly regrettable that the information in this correspondence was not shared with me when you wrote to me last night, but I fully accept that you were not aware, at that stage, of these emails.
“I understand that the relevant emails were only unearthed by your husband this morning, and that you have updated me as soon as possible.”
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The PM then labelled the incident “an inadvertent failure” and said he sees “no need” for further action.
The government has also published a letter from Sir Laurie Magnus, an independent adviser on ministerial standards, to Sir Keir.
He wrote: “It is regrettable that information provided on successive days has generated confusion, but I find no evidence of bad faith.”
The letters came after Ms Reeves had received an apology from a lettings agency after the company confirmed it offered to apply for a rental licence and then failed to do so.
On Wednesday evening, the Daily Mail reported Ms Reeves had failed to pay for a “selective” licence when renting out her family home in Dulwich, south London, which she has left while living in Downing Street as chancellor.
In an exchange of letters a matter of hours later, Sir Keir Starmer gave the chancellor his backing and said further investigation into the issue was “not necessary” after consulting his independent ethics adviser Sir Laurie Magnus.
Ms Reeves immediately faced calls to leave her post, having admitted to mistakenly breaching local council housing rules by failing to secure the licence.
The Housing Act 2004 gives councils the power to make landlords accredit themselves in certain areas.
However, late on Thursday afternoon, the owner of lettings agency Harvey and Wheeler released an apology to the chancellor.
In it, boss Gareth Martin confirmed a member of his staff said they would apply for the licence for the Reeves family – but this was never done, as the person “suddenly resigned” prior to the start of the tenancy.
Mr Martin said: “We alert all our clients to the need for a licence. In an effort to be helpful our previous property manager offered to apply for a licence on these clients’ behalf, as shown in the correspondence. That property manager suddenly resigned on the Friday before the tenancy began on the following Monday.
“Unfortunately, the lack of application was not picked up by us as we do not normally apply for licences on behalf of our clients; the onus is on them to apply. We have apologised to the owners for this oversight.
“At the time the tenancy began, all the relevant certificates were in place and if the licence had been applied for, we have no doubt it would have been granted.
“Our clients would have been under the impression that a licence had been applied for. 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.”
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Under the Housing Act 2004, introduced by Labour, councils can decide to introduce selective licensing, where residential landlords in specified areas must have a licence.
Landlords must adhere to certain requirements to obtain a licence, including gas certificates, working carbon monoxide alarms and fire safety regulations for furnishings.
They must secure a licence within 28 days of renting out a home.
Southwark Council, where Rachel Reeves’ house is, charges £900 for a licence, which lasts five years.
Failure to secure a selective licence can result in a penalty of up to £30,000 or an unlimited fine from a court upon conviction.
Landlords can also be made to repay up to 12 months’ rent to the tenant or they can be prevented from renting out the property.
Serious and repeat offenders can be prosecuted, with a sentence of up to five years or an uncapped fine, and they can be put on a rogue landlords database.
The government has published emails between her husband Nicholas Joicey and the agency showing that Harvey and Wheeler had agreed to apply for the licence, while Ms Reeves told the prime minister in a letter she took “full responsibility” for the matter.
The final email in the series, sent on 13 August 2024 by the letting agent, said: “I will do the selective licence once the new tenant moves in.”
In the letter from Ms Reeves to Sir Keir, the chancellor said: “Yesterday I wrote to you and said that we were not aware that a licence was necessary to let out our property, based on conversations my husband had with the agency yesterday.
“Today the letting agency and my husband have found correspondence confirming that on 17 July 2024 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.
“They have also confirmed today they did not take the application forward, in part due to a member of staff leaving the organisation. Nevertheless, as I said yesterday, I accept it was our responsibility to secure the licence.
“I also take responsibility for not finding this information yesterday and bringing it to your attention.
“As I said to you today, I am sorry about this matter and accept full responsibility for it.”
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The Conservatives are calling for further investigations from Downing Street into what happened and the timeline of events.
However, it appears that Number 10 considers the matter closed as it has consistently stood behind the chancellor – and says she will deliver next month’s budget.
