Employee-owned John Lewis Partnership has decided to close down its £500m build-to-rent joint venture with investment firm Aberdeen due to lack of funding.
John Lewis and what was then Abrdn hooked up in 2022 with plans to build an initial 1,000 homes for rent. Under-used and surplus John Lewis property was to be converted to flats or redeveloped for a mix of retail and residential use. Developments around shops in Bromley and West Ealing in Greater London were planned, and a vacant John Lewis warehouse in Reading was to be converted.
The plan was that the homes would be developed and managed by the John Lewis Partnership. It aired ambitions to have 10,000 John Lewis homes by 2033.
However, now under new leadership, the company has decided to stick to retail.
Katherine Russell, the director of the company’s build-to-rent programme, said: “It is with regret that I am writing to inform you that the John Lewis Partnership has taken the difficult decision to withdraw from our ‘build to rent’ property business.
“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.
“Unfortunately, the current climate is one of higher interest rates, inflationary pressures and a more cautious property market. As such, we have been unable – through our investment partner Aberdeen – to raise the necessary investment to deliver the developments.”
Brendan Geraghty, chief executive of the Association for Rental Living (ARL), said: “When a brand as well-known and well-resourced as John Lewis concludes that the economics no longer work, ministers need to sit up and think very carefully about how they respond. The UK needs institutional investment in high-quality rental homes – it is not a nice-to-have, it is essential to meeting the government’s own housing targets. This money is still very much there. But if the policy environment continues to deter exactly the kind of long-term, service-driven capital that JLP represents, we will miss a generational opportunity to deliver the homes this country so desperately needs.”
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