The John Lewis Partnership is closing its housebuilding business and scrapping plans for around 1,000 rental homes, five years after launching a push into build-to-rent as part of a wider diversification strategy.
The employee-owned retailer said it would withdraw from residential development and property management after existing contracts covering four buildings come to an end, citing “a fundamental shift in the economic conditions that underpinned the venture when it launched”.
Our rental property ambition was based on a very different financial environment.”
A spokesperson said: “Our rental property ambition was based on a very different financial environment: one with more stable investment returns, lower borrowing costs, and more affordable costs to build homes.”
The news is likely to come as a disappointment to ministers as they struggle to deliver on their pledge for 1.5 million new homes.
John Lewis first entered the sector in 2020 under former chair Dame Sharon White, with plans to build 10,000 build-to-rent homes over a decade as part of efforts to generate more income outside retail. Schemes progressed at sites in Bromley, West Ealing and Reading, while the business also took on management of four residential buildings owned by fund manager Aberdeen.
Zero profit
However, the housing venture did not generate a profit. The partnership said trading conditions in London’s new homes market had become increasingly difficult, adding that housing development in the capital had collapsed and that other developers faced similar pressures.
Industry figures say the decision reflects wider market challenges, including higher interest rates, construction inflation, planning delays and tighter regulation.
According to the BBC, Waitrose stores at affected development sites will continue to trade as normal during a “responsible transition out of the business”.
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