Homelessness Minister resignation: Was Rushanara Ali right to stand down?

NRLA chief executive Ben Beadle shares his thoughts on the housing story dominating the week’s headlines. 

Unless you have been living under a rock for the last few days, you will be aware that the Government’s homelessness minister, Rushanara Ali, has stood down in a row over a rental home she owns in East London. 

What are the facts? 

According to reports, first published in the The i Paper, the minister repossessed her rental property in Bow, which was home to four tenants, in order to sell it. 

Originally put up for sale for £914,995 in November last year, the price was reduced to £894,995 in February this year. 

The property was subsequently relet to new tenants, said to be at some point within the last ‘four to five’ months’, with the rent increasing by £700 from £3,300 a month to £4,000 – more than a 20% increase. 

For an MP who has spoken out about ‘private renters being exploited’ by landlords and the Labour Government ‘empowering people to challenge unreasonable rent increases’ this is not a good look, to put it mildly. 

But it does, however, shine a light on a number of the issues we raised during our campaigning work around the new Renters’ Rights Bill and the impact it will have when it comes into force, expected to be later this year. 

While section 21, the so-called ‘no fault eviction’ will be banned under the Bill, repossessing a property to sell will be a valid ground for repossession. 

Under initial plans the Government had proposed a ban on landlords re-advertising properties to rent for a period of 12 months if they had been taken off the market to be sold, in a bid to stop landlords using this as an excuse to evict tenants to command a higher rent. 

This has recently been reduced to a more reasonable six months, in line with our calls – although we expect the Government will overturn this reduction when the Bill returns to the Commons in the autumn. 

Without speaking to Ms Ali directly it is impossible to know her motivations, but all the evidence we have read suggests she did intend to sell the property, one of two she lets out in the capital. 

The property is recorded as being listed for sale – and even reduced in price – indicating a commitment to letting it go. 

So, what can you do as a landlord if your house does not sell? 

Surely it would be worse to let the property lie empty, not least in a city like London, which is the midst of a long term and ongoing housing supply crisis. 

What is a fair rent?

As for the issue of the rent, tenants can currently challenge at the First-tier Tribunal any rent increase using a Section 13 notice and may be able to challenge rent levels at the beginning of a tenancy, within six weeks of the tenancy starting. At the moment, these rights are not often used – but we expect that with the changes in the Renters’ Rights Bill, more tenants will do so. 

As to whether a £700 increase is ‘fair’ or not – this is a $64,000 question.  

Figures from Rightmove out this month show the average London rents have reached £2,712 per calendar month this quarter. 

However, this is an average and as such, includes everything from Chelsea townhouses to bedsits, so is not the most useful comparison. 

A similar property close to Ms Ali’s rental (although with five bedrooms) is advertised for £4,350pcm, so is certainly in the same ballpark, although in her case a 20% increase on the previous rent is much higher than the average increase for the wider Tower Hamlets area.  

Figures from the Office for National Statistics (ONS) show rents were up 5.4% in the area on the previous year’s figures, with the average increase for London as a whole 7.3%. 

Only time will tell when it comes to the mechanism that the Government plans to use to determine what constitutes ‘fair’ and we are continuing to make representations on how that will work in practice. 

Is it right she resigned? 

The BBC quotes her letter of resignation as saying she has followed all relevant legal requirements at all times, but that remaining in the role would be a ‘distraction from the ambitious work of this government’. 

It is not for us to comment on whether she should or should not have resigned, although I can see that her position was untenable. 

However, I believe questions being asked now as to whether MPs should be allowed to be landlords at all, are taking things too far. 

We are not seeking to defend the former minister’s actions, but the debacle that has unfolded in the newspapers this week arguably raises some valid and important questions about the workability of new rules and their nuances when they come into force.

With this in mind we continue to work with the Government to shape this legislation as we approach Royal Assent. 

Photo credit: Rushanara Ali ©House of Commons