The John Lewis Partnership is pulling out of a £500m deal to build almost 1,000 residential rental homes for rent in Bromley, Reading and West Ealing amid a “cautious property market”.
The retailer, which owns Waitrose supermarkets and John Lewis department stores, blamed a “fundamental shift in the economic conditions”, which it said had made it difficult for its financial partner, Aberdeen, to raise funds for the venture, first launched in 2020.
Aberdeen said its difficulties with fundraising “reflect the realities of the environment” and a “challenging UK market” between 2022 and 2025.
A spokesperson said the investment firm still planned to increase its presence in UK homes through existing partnerships.
“We have high conviction in build-to-rent in the UK and globally,” they said. “Collaboration is vital to address the UK housing crisis and build-to-rent should be a healthy part of the property mix.”
Brendan Geraghty, chief executive of the Association for Rental Living, said: “This is deeply disappointing news and a real loss for consumers.
“[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.”
John Lewis, which is the UK’s largest employee-owned business, said the shift away from homebuilding and management was part of a broader strategic decision to refocus on its core retail brands.
The end of the build-to-rent project marks a further step away from the strategy to move beyond retail laid out under the group’s former chair, Sharon White, who was replaced by Jason Tarry, a former Tesco executive, in September 2024.
Five years ago, John Lewis announced bold plans to build as many as 10,000 rental homes as it aimed to generate 40% of profits from outside retail by 2030.
In 2023, it filed planning applications for projects in west and south-east London, and prepared to manage tenancies at three sites built by other developers.
It has secured headline consent for all three projects and is will complete final negotiations with local authorities before considering options for the sites’ future, which could include their sale to property developers.
The company said it would continue to fulfil existing contracts to manage homes at four sites owned by other parties who are linked to Aberdeen – in Birmingham, Leeds, Leicester and Stratford – which would gradually come to an end this year and next.
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.”