As a government minister, Rushanara Ali was foolish, but as a landlord, completely rational. Her case exposes exactly what’s wrong with Labour’s rental reform, writes Emma Revell
Keir Starmer must be the only Prime Minister to wish his colleagues had a bit less hands-on experience of their briefs.
At the start of the year, his anti-corruption minister was forced to resign after being drawn into a corruption investigation in Bangladesh. Then last week his homelessness minister had to quit after it was reported that she had turfed tenants out of an East London property she owns, claiming she planned to sell, only to whack up the rent by £700 a month and advertise for new tenants.
Eat your heart out, Armando Iannucci.
Both Tulip Siddiq and Rushanara Ali had their defenders. Rachel Reeves said she “didn’t understand” why some were calling for Ali’s resignation, less than 24 hours before she inevitably quit. But despite their attempts to deny wrongdoing, both their positions were ultimately untenable.
But we should pause over Ali’s case, because it’s much more than just an embarrassing episode for the government. It shows how politicians – both Tory and Labour – completely fail to understand incentives.
Renters’ Rights Bill cuts against rational incentives
What Labour have promised, through their Renters’ Rights Bill – which incorporates many of the ideas proposed by the previous government, though never actually implemented – is the “biggest shakeup to the private rented sector for over 30 years”. In their eyes, it is designed to protect the increasing number of Brits privately renting – through choice or through their inability to save for a deposit – from the scourge of bad landlords, giving people longer tenancies, more freedom to decorate or own a pet, and freeing them from the fear of being evicted for spurious reasons.
So it’s more than a little embarrassing that the minister directly responsible for helping to get the law on to the statute books behaved in completely the opposite way to that prescribed by the Bill. But that’s because the Bill cuts against rational incentives.
It should be obvious even to our politicians that if we make it harder to make money out of renting a property, we will get fewer people renting out their properties. And the Bill definitely makes it harder. It limits the ability of landlords to increase rents mid-contract, with longer contracts by default. Which sounds kind, but also means they can’t cover increased costs from, say, rising mortgage rates or energy bills. It abolishes Section 21, the so-called ‘no-fault’ evictions, which are of course nothing of the sort: no one claims to have been ‘evicted’ from a hotel on day four, having paid for a three-night stay.
The more difficult it is to do something, the fewer people will do it. But legislators seem to think this will magically not apply to landlords who, faced with the prospect of even more legislation – like the possible re-emergence of rules requiring rented properties to be at least a C grade on an EPC certificate – are already withdrawing properties from the market. What does the government think having fewer properties available to rent does to the cost, I wonder? If only we had some sort of index of rental prices so we could find out.
Forget rental reform and just build more houses, please
Even on their own, these rules would be enough to curtail rental supply – causing rises in bills that have done far more damage than they claim to avert. As they bed in, they are likely to do further harm, for example by leading landlords – those that remain – to become incredibly picky about the tenants they choose.
And all this is just in response to the rules coming down from Westminster. Mayor of London Sadiq Khan has campaigned for powers to enforce rent controls in London for years – despite countless cities around the world providing incontrovertible real-world case studies for why that would be a phenomenally stupid thing to do.
In the meantime, the city he has been mayor of for going on a decade has seen housebuilding grind to an almost complete halt. Figures released by consultancy Molior show that only 2,158 private housing constructions were started in London in the first six months of 2025, versus an overall housing target of 88,000. Numbers in the second quarter were half the already paltry figures from Q1.
At the same time, analysis by my colleagues at the Centre for Policy Studies found that London has just 427 homes for every 1,000 residents. If London were to match the average ratio in comparable European countries such as Italy, Denmark, France, and Finland, it would find it had an implied shortage of 1.1m homes.
What Rushanara Ali did was short-sighted, bordering on idiotic given her ministerial brief. But if Labour pushes ahead with restrictions on the private rented sector, thousands of other landlords will either hike rents in advance or exit the sector – leaving millions of tenants worse off. Ultimately, the only real way to fix the housing crisis is to have more homes available to rent and buy. So stop tinkering with the rental market, and get building.
Emma Revell is external affairs director at the Centre for Policy Studies