The John Lewis Partnership has abandoned a £500million venture to construct nearly 1,000 rental properties across three locations in Bromley, Reading and West Ealing.
Britain’s largest employee-owned retailer, which operates both the John Lewis department store chain and Waitrose supermarkets, attributed the decision to a “fundamental shift in the economic conditions” affecting the property sector.
The partnership stated that these changed circumstances had created significant obstacles for its financial partner, Aberdeen, in securing the necessary investment for the project.
Aberdeen acknowledged that its struggles to raise capital “reflect the realities of the environment” during what it described as a “challenging UK market” spanning 2022 to 2025.
John Lewis is axing a £500milllion deal to build 1,000 homes
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Despite withdrawing from this particular partnership, the investment firm indicated it remains committed to the residential sector through other ventures.
A spokesperson for Aberdeen said: “We have high conviction in build-to-rent in the UK and globally. Collaboration is vital to address the UK housing crisis and build-to-rent should be a healthy part of the property mix.”
The firm emphasised its intention to expand its UK housing portfolio via existing partnerships with other developers.
Brendan Geraghty, the chief executive of the Association for Rental Living, said: “This is deeply disappointing news and a real loss for consumers.
Britain continues to struggle with an ongoing
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“[John Lewis] brought something genuinely different to rental living – a trusted consumer brand, a service-first culture and a long-term commitment to quality that institutional investors and residents alike responded to.”
The collapse of the build-to-rent initiative represents a significant departure from the diversification strategy championed by former chair Sharon White.
She was succeeded by Jason Tarry, previously an executive at Tesco, who took the helm in September 2024. The partnership has since pivoted towards strengthening its traditional retail operations.
Half a decade ago, the partnership unveiled ambitious plans to develop up to 10,000 rental homes, targeting 40% of its profits from non-retail activities by 2030.
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Planning applications were submitted in 2023 for developments in west and south-east London, with headline consent secured for all three sites. The company will conclude negotiations with local councils before determining the future of these locations, potentially including sales to property developers.
A John Lewis Partnership spokesperson said: “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.
“Since 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.”