It sounds prestigious, the Southwark Council Selective Licensing Scheme. It happens to be a legislative tool that a local authority can use to drive up standards of private renting when the tenant comprises a single-family household or a household occupied by no more than 2 unrelated sharers.
A local authority can designate certain parts of its area of control as being subject to the scheme. Whether a particular letting would be caught by the scheme depends on close examination of the small print. Thus Rachel Reeves has some defence to a red-tops style allegation that she bloody well ought to have known that a licence was needed for letting her family home in Dulwich.
On paper the sanctions for breaking the rules, as in criminal offence, are potentially severe, including an unlimited fine on prosecution, an alternative £30,000 fine, and the landlord/managing agent being banned from running a rental property. If you are an agent who lets the property sans licence but does not then manage it, are you in trouble? Don't know the answer to that.
Because the language on enforcement is full of 'may', it is not immediately clear what degree of discretion a Council can have on how to act in any breach situation. So far I can find nothing to support the offending landlord being able to fix the problem by making a retrospective application for a licence.
This latter point carries a sting in the tail - under a licence contravention the landlord would be unable to use S21 Housing Act 1988 (end in sight for this but the renters' rights legislation has not yet been brought into force) to serve a no-fault eviction notice. This would not be a problem for Ms Reeves, assuming that her tenant is still under a fixed term, but it would bother a non-compliant landlord who has allowed a tenant to stay on after the expiry of the fixed term and is relying on the right to get the tenant out on notice.
The consequences of Reeves' letting become political as much as legal, and my assessment is that it is not a cheap argument to bring in Angela Rayner's situation as an analogy.
Whether a selective scheme letting requires a licence may be straightforward in some cases but not in others, and I have no information on the status of Reeves' tenant. According to the BBC:
'Sources close to the Chancellor said that her letting agent had told her it would advise her if a licence was needed and did not do this'.
Question 1: Did Reeves personally deal with the letting? It would be normal for a letting agent to report the nature of a favoured prospective tenant to the landlord.
Question 2, and the big one: Would it be reasonable for a landlord to rely on an estate agent's judgement as to whether a licence was needed, when the landlord (or maybe one of the landlords in the case of a jointly owned property) happens to be high up the food chain of Government and the potential sanctions for breaking the rules are a lot harsher than a fine for breaking Covid regulations.
On Question 2, I am not disparaging estate agents, but this was a sensitive situation, and with those breach consequences in mind would it not have been appropriate to drill down and get lawyers' advice? It was this angle that did for Angela Rayner ie not going far enough in getting professional advice over her stamp duty issue. The old adage of ignorance of the law being no defence seems to be going out of fashion, but any politician surely understands the risk of not being squeaky clean on personal legal issues. However distracted the Chancellor may be with the small matter of an impending Budget, I doubt if it would wash to declare airily that this was mere inadvertence, especially when she is on record in supporting the use of selective licensing schemes by local authorities.
The Government's independent ethics adviser has swiftly determined that further investigation is not necessary, and the Prime Minister, wielding a large dustpan and brush, has said that he is happy 'that the matter can be drawn to a close'.
Is that the end? Labour controlled Southwark Council must decide what to do, and politically we have a classic hot potato: the 17 percent polling Conservatives have no choice but to attack, and hard.
As ever, perception in politics matters the most. Whatever the outcome, the situation is not a good look for the Chancellor.
The author is a writer, speaker, and former managing partner of a City law firm. This article is based on publicly available information. It does not comprise legal advice.