John Lewis Partnership has abandoned its build-to-rent housing ambitions, retreating from a high-profile property diversification strategy as the group pivots back towards its core retail business.
The employee-owned retailer confirmed it would withdraw from the rental housing scheme first championed by its former chair, Sharon White, who had sought to reduce reliance on retail by generating 40 per cent of profits from non-retail ventures by 2030. That target was later scrapped.
The build-to-rent initiative, launched in partnership with Aberdeen, aimed to deliver around 1,000 rental homes across sites in Ealing and Bromley in London and Reading in Berkshire. Aberdeen had pledged to raise £500m from institutional investors to fund the developments.
However, John Lewis said that the funds were never secured due to shifting macroeconomic 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 construction costs,” a spokesman said. “The current climate, higher interest rates, inflationary pressures and a more cautious property market, means the model no longer meets our investment criteria.”
The decision marks a significant strategic reset under Jason Tarry (pictured), the former Tesco executive who became chair in 2024. Tarry has sought to restore the partnership’s focus on retail performance after several years of financial strain and cancelled staff bonuses.
The group is now pursuing an £800m investment programme aimed at revitalising its department stores, alongside a £1bn investment in its Waitrose estate of 320 shops. Recent initiatives include a high-profile partnership to bring Topshop concessions into John Lewis stores as it seeks to win back younger customers.
The build-to-rent strategy had originally been positioned as a way to unlock value from surplus Waitrose land and car parks while creating a more stable, long-term income stream less exposed to retail volatility.
However, the proposals were controversial from the outset. Local communities and planning authorities raised concerns over building heights, density and the proportion of affordable housing. Although several schemes ultimately secured planning approval, in some cases after appeals and intervention by government inspectors, the projects required significant upfront investment.
While John Lewis has not disclosed how much has been spent to date, it is understood that several million pounds were invested in design, planning and legal costs before the scheme was halted.
The withdrawal underlines the pressure facing retailers that diversified into property during the era of low interest rates. Higher borrowing costs have eroded returns on residential development, while construction inflation has increased project risk.
For John Lewis, the move signals a return to fundamentals after what some critics inside and outside the partnership viewed as a distraction from its core business.
With the cost-of-living crisis squeezing consumer spending and competition intensifying across both fashion and grocery, the partnership is betting that renewed focus on shopkeeping, rather than landlord ambitions, offers a clearer path to restoring profitability and rebuilding confidence among its employee-owners.
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John Lewis pulls plug on build-to-rent venture amid retail reset