John Lewis Partnership Exits BuildToRent Venture Amid Economic Pressures

John Lewis Partnership has announced its decision to withdraw from its build-to-rent housing initiative, a move that marks a significant shift in the retailer’s strategic focus. This decision comes as inflation and rising interest rates have heavily impacted its operating environment.

The chairman of John Lewis, Jason Tarry, is steering the company back to its core retail business after years of distractions caused by a costly expansion into the property market. The partnership’s previous plans, unveiled by former chairwoman Baroness White of Tufnell Park, aimed to diversify revenue sources significantly. However, market conditions have since changed, making the proposed ventures unattractive.

John Lewis had planned to collaborate with Aberdeen to develop 1,000 rental homes in locations such as Ealing and Bromley in London, as well as Reading in Berkshire. However, the anticipated fundraising of £500 million from institutional investors never materialised. This lack of funding is attributable to a more cautious property market, which is currently grappling with the ramifications of higher borrowing costs.

A spokesperson for the partnership stated that its ambitions for rental properties were based on a vastly different financial landscape, which boasted stable investment returns and lower construction costs. The current economic climate has forced a reassessment of these objectives, leading to the conclusion that the model is no longer viable.

This strategic retreat demonstrates Tarry’s commitment to refocusing the business on its traditional retail operations, which include an £800 million investment programme aimed at revitalising the shopping experience. This includes partnerships such as the tie-up with Topshop and investments aimed at enhancing Waitrose’s 320 shops.

The decision to scrap the build-to-rent scheme marks a clear reversal from former plans that sought to derive 40 per cent of annual profits from non-retail ventures by the year 2030. Local communities had also voiced significant opposition to the initial proposals, raising concerns about the height of new developments and the adequacy of affordable housing provisions.

Despite having spent considerable resources on the project, including millions during the developmental phase, John Lewis has decided to abandon further efforts with high-rise residential buildings. This marks a pivotal moment for the retailer as it re-evaluates its priorities and aims to regain the trust of its customers and employees.