The John Lewis Partnership has abandoned its ambitious plans to build a portfolio of rental homes, marking a significant retreat from a strategy intended to diversify the retailer beyond its core department store and supermarket businesses. The company confirmed Wednesday it is withdrawing from a £500 million deal to develop nearly 1,000 residential properties in Bromley, Reading, and West Ealing.
The decision, which impacts a small team of employees who will be offered redeployment within the business, comes as higher interest rates, inflationary pressures, and a softening property market have undermined the financial viability of the venture. Launched in 2020 under then-chairwoman Dame Sharon White, the build-to-rent project initially aimed to construct as many as 10,000 homes, with approximately 7,000 located on land already owned by the partnership.
According to the partnership, the economic conditions that initially supported the project have fundamentally shifted. “Our rental property ambition was based on a remarkably different financial environment: one with more stable investment returns, lower borrowing costs and more affordable costs to build homes,” a spokesperson stated. “Unfortunately, the current climate…has meant the model no longer meets the partnership’s investment criteria.”
The move represents a further departure from the turnaround strategy championed by White, who envisioned generating 40% of the partnership’s profits from sources outside of retail by 2030. White was succeeded by Jason Tarry, formerly of Tesco, in September 2024. Under Tarry, the partnership is now prioritizing investment in its existing John Lewis and Waitrose stores, with approximately £800 million allocated to improving the John Lewis customer experience and a £1 billion program underway at Waitrose.
The partnership has already secured planning consent for projects in Bromley, West Ealing, and Reading, encompassing around 1,000 homes. Whereas it will continue to progress these applications, it is likely to seek to sell the development rights to other property developers. The company will also continue to fulfill existing management contracts for four build-to-rent sites owned by third parties linked to financial partner Aberdeen, located in Birmingham, Leeds, Leicester, and Stratford, though these arrangements will conclude over the next year and a half.
Aberdeen, the financial partner in the venture, acknowledged the challenges in securing funding. A spokesperson stated that the difficulties in fundraising “reflect the realities of the environment” and a “challenging UK market” between 2022 and 2025, but affirmed the firm’s continued commitment to the build-to-rent sector through other partnerships. “We have high conviction in build-to-rent in the UK and globally,” they said.
Industry observers expressed disappointment with the decision. Brendan Geraghty, chief executive of the Association for Rental Living, described the move as “deeply disappointing news and a real loss for consumers,” noting that John Lewis brought a unique level of trust and service to the rental market.
The John Lewis Partnership did not comment on the financial implications of withdrawing from the build-to-rent project, nor did it provide details on potential losses associated with the decision. The company remains committed to its existing property assets and retail operations, and will continue to evaluate future investment opportunities.
