Rushanara Ali has resigned as Homelessness Minister, Downing Street has confirmed.
The move comes after she was accused of hypocrisy over the way she handled rent increases on a house she owns in east London.
There were calls for her to step down from homelessness charities and opposition politicians.
In a letter to the prime minister she has said that remaining in the role would be “a distraction from the ambitious work of this Government”.
In a story first broken by the The i Paper, four tenants who rented a house owned by Ali in east London were sent an email in November giving them four months’ notice their lease would not be renewed.
However, the property was re-listed shortly after they moved out, at a rent £700 a month higher.
Tory Party chairman Kevin Hollinrake accused Ali of “staggering hypocrisy” over the handling of the property but Ali’s spokesman said she “takes her responsibilities seriously and complied with all relevant legal requirements”.
In a letter to the prime minister, Ali wrote: “It is with a heavy heart that I offer you my resignation as a minister.”
Insisting that “at all times I have followed all relevant legal requirements” she added: “I believe I took my responsibilities and duties seriously, and the facts demonstrate this.
“However, it is clear that continuing in my role will be a distraction from the ambitious work of the government.
“I have therefore decided to resign from my Ministerial position.”
Responding to her resignation, prime minister Sir Keir Starmer thanked her for her work, which he called “diligent”.
The PM praised her work to repeal the Vagrancy Act and added: “I know you will continue to support the Government from the backbenches and represent the best interests of your constituents in Bethnal Green and Stepney.”
A source close to Ali said the previous fixed-term contract had been ended because the house was being put up for sale and the tenants had been told they could stay on a rolling basis while the house was on the market, but they had chosen to go.
The house was put on the market in November 2024 with an asking price of £914,995 but was reduced in February by £20,000 and the i Paper said it was only re-listed as a rental because it had not sold.
The government’s Renters’ Rights Bill is in its final stages in Parliament, and will ban landlords re-listing a property for rent, if they have ended a tenancy in order to sell, for six months.
Landlords must also give four months’ notice when the legislation is passed, which is not expected to be until at least next year.
London Renters Union spokesperson Siân Smith said Ali’s actions were “indefensible” and she “must step down” due to a “clear conflict of interest” with the Bill in its final stages.
Ali had to give up part of her ministerial portfolio in October last year, when she came under fire for her attendance at a conference linked to the parent company of one of the firms heavily criticised in the recent Grenfell inquiry.
Giving up her duties managing building safety and the government’s response to the Grenfell Tower fire, she said she was relinquishing her building safety brief because “perception matters”.
Welcoming her resignation, a Liberal Democrat spokesperson said: “Rushanara Ali fundamentally misunderstood her role.
“Her job was to tackle homelessness, not to increase it.
“At a time of widespread political disillusionment, her actions were staggeringly irresponsible and only added insult to injury after years of delay for renters’ rights reform under the Conservatives.”