The John Lewis Partnership (JLP) is withdrawing from its build-to-rent (BTR) property business, blaming a “fundamental shift” in the economic conditions that underpinned the venture when it launched in 2020.
The John Lewis Partnership has withdrawn from a £500 million agreement to develop nearly 1,000 build-to-rent homes across three London and Reading sites, citing deteriorating economic conditions and a cautious property market.
The retailer, which operates John Lewis department stores and Waitrose supermarkets, stated that a “fundamental shift in the economic conditions” prevented its financial partner, Aberdeen, from raising the necessary funds for the venture originally launched in 2020.
The planned developments were to be located in Bromley, Reading and West Ealing. John Lewis has secured headline planning consent for all three projects and will complete final negotiations with local authorities before determining the sites’ future, which may include sale to property developers.
Economic pressures force retreat
Aberdeen confirmed its fundraising difficulties “reflect the realities of the environment” and described a “challenging UK market” between 2022 and 2025. The investment firm stated it maintains plans to expand its UK residential presence through existing partnerships.
“We have high conviction in build-to-rent in the UK and globally,” an Aberdeen spokesperson said. “Collaboration is vital to address the UK housing crisis and build-to-rent should be a healthy part of the property mix.”
A John Lewis Partnership spokesperson attributed the withdrawal to changed financial conditions: “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 – higher interest rates, inflationary pressures and a more cautious property market – has meant the model no longer meets the partnership’s investment criteria.”
Strategic shift under new leadership
The decision marks another departure from the diversification strategy established under former chair Sharon White, who was replaced by Jason Tarry, a former Tesco executive, in September 2024. Five years ago, John Lewis announced plans to build up to 10,000 rental homes as part of an ambition to generate 40% of profits from non-retail activities by 2030.
The company filed planning applications for the London and Reading projects in 2023 and prepared to manage tenancies at three sites developed by other parties.
John Lewis will continue to fulfil existing management contracts at four sites owned by parties linked to Aberdeen in Birmingham, Leeds, Leicester and Stratford. These arrangements will conclude gradually during 2025 and 2026.
Brendan Geraghty, chief executive of the Association for Rental Living, described the news as “deeply disappointing” and noted that John Lewis “brought something genuinely different to rental living – a trusted consumer brand, a service-first culture and a long-term commitment to quality.”
The partnership, the UK’s largest employee-owned business, stated the retreat from homebuilding forms part of a broader refocus on core retail operations, with significant recent investment in its John Lewis and Waitrose brands.
Open Letter Sent to the Government to back UK Build-to-Rent sector
The Association for Rental Living (ARL) has written an open letter to government urging immediate support for the UK Build-to-Rent sector, highlighting growing viability challenges that are deterring investment in new rental homes.
The letter follows the announcement that the John Lewis Partnership is withdrawing from its Build-to-Rent property business, which ARL CEO Brendan Geraghty described as “deeply disappointing and a real loss for consumers.”
Addressed to key ministers and officials, including Housing Secretary Steve Reed MP, Chancellor Rachel Reeves MP, and Housing Minister Matthew Pennycook MP, as well as parliamentary housing committee chair Florence Eshalomi MP, the letter urges the government to “take sharp notice” of the John Lewis decision. ARL warns it exemplifies the combined regulatory and market pressures that are undermining investment in new rental housing across the UK.
The ARL stresses that without intervention, the consequences are clear – slower housing delivery, reduced rental supply, increased affordability pressure and greater reliance on short-term or lower-quality stock, calling on the Government to now restore confidence and recalibrate viability for institutional investors by:
- Providing long-term policy stability and avoiding further cumulative regulatory layering without economic assessment.
- Designing a planning system that supports delivery, with clarity and speed including classifying housing as critical infrastructure, explicitly recognising Build to Rent within planning policy, mandating local plans to include specific policies on Build to Rent, and introducing mandatory targets for purpose-built rental homes within local authority housing targets.
- Devising a proportionate regulatory and tax framework that recognises the economics of large-scale rental with the reinstatement of Multiple Dwellings Relief for Stamp Duty Land Tax and the rationalisation of selective licensing regimes.
The ARL says it recognises these policy changes may take time but calls on government to publicly recognise and state support for institutional investment in UK BTR now, and acknowledge the viability challenges being faced in order to give investors greater confidence that the Government is committed to making the UK a good place to invest.