John Lewis Partnership has scrapped its loss-making housebuilding venture, ending a diversification strategy launched in 2020 under former chair Sharon White.
The employee-owned retailer confirmed it will withdraw from residential property development and abandon plans to build around 1,000 homes across three sites.
A spokesman said the decision followed “a fundamental shift in the economic conditions that underpinned the venture when it launched”.
The partnership said it will instead concentrate on its core retail businesses, including John Lewis department stores and Waitrose supermarkets.
The move marks a reversal of Ms White’s strategy to generate 40 per cent of profits from non-retail activities by 2030.
When the plan was unveiled in October 2020, the partnership outlined ambitions to develop 10,000 build-to-rent homes over a decade.
Three schemes progressed to the planning stage, covering sites in Bromley, West Ealing and Reading with consent secured for roughly 1,000 homes.
The Bromley and West Ealing developments were designed to be built above existing Waitrose supermarkets, while the Reading project targeted a former industrial site.
John Lewis Partnership has scrapped its loss-making housebuilding venture
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The partnership also expanded into residential property management, taking on responsibility for four apartment blocks owned by fund manager Aberdeen.
Nina Bhatia, strategy director at the partnership, said in 2023: “At a time when there is a housing crisis and people want homes to buy or rent we are making a huge contribution.”
The property arm recorded a pre-tax loss of £406,000 in the 12 months to January, reflecting financial pressures facing the venture.
A spokesman 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.”
Waitrose will come into renewed focus
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The partnership said elevated interest rates, inflation and subdued property market conditions meant the model no longer met its investment criteria.
It added that other developers were experiencing similar challenges, with residential development activity in London having “collapsed”.
Industry pressures have included rising construction costs, lower demand for flats, tighter post-Grenfell regulations, planning delays and higher borrowing costs affecting both developers and buyers.
The Bromley project faced opposition after proposals did not meet earlier affordable housing expectations, while residents near the Reading site raised concerns about pressure on local services.
The partnership described it as a responsible transition out of the business
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Waitrose supermarkets at the affected locations will continue operating, and the Reading site is expected to be sold.
John Lewis said it will continue to manage four residential buildings in Leeds, Birmingham, Leicester and Stratford under existing agreements.
The partnership described this as “a responsible transition out of the business”.
The decision comes as the retailer continues to focus on stabilising its finances following store closures and job reductions in recent years as online shopping reshapes the sector.