Employee-owned John Lewis Partnership has decided to close down its 拢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.
The plan was that the homes would be developed and managed by the John Lewis Partnership. The ambition was to have 10,000 John Lewis homes by 2033.
However, now under new leadership, the company has decided to stick to retail.
An initial three 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.
All the three schemes secured planning permission and will now be put up for sale to other developers.
John Lewis Partnership also manages four sites on behalf of Aberdeen 鈥� in Leeds, Leicester, Birmingham and Stratford. It intends to fulfil its contractual responsibilities on these until another party is secured to take over the management of the sites.
A spokesperson said: 鈥淭he John Lewis Partnership has today announced its decision to withdraw from its build-to-rent (BTR) property business.聽
鈥淥ur 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 鈥� higher interest rates, inflationary pressures and a more cautious property market 鈥� has meant the model no longer meets the Partnership's investment criteria.
鈥淪ince we embarked on the rental property plans in 2020, we have made significant progress with our core retail strategy. This has seen us invest heavily in our customer offer for our unique brands John Lewis and Waitrose, simplifying our business and strengthening our balance sheet. The strategy is progressing well and involves modernising our stores, enhancing our digital platforms and improving our supply chain to provide the best possible quality, service and value to our customers. We remain committed land owners in our communities and continue to invest significantly in our property assets and retail offer.
鈥淲e鈥檙e proud of what we鈥檝e achieved in terms of progress with three planning applications and managing third party BTR homes for residents to a high standard. We will fulfil our existing management contracts at four BTR sites as part of a responsible transition out of the business.鈥�
Brendan Geraghty, chief executive of the Association for Rental Living (ARL), said: 鈥淲hen 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 鈥� it is not a nice-to-have, it is essential to meeting the government鈥檚 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.鈥�
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