The John Lewis Partnership has withdrawn from a £500 million agreement to develop nearly 1,000 build-to-rent homes across three London and Reading sites, citing deteriorating economic conditions and a cautious property market.
The retailer, which operates John Lewis department stores and Waitrose supermarkets, stated that a “fundamental shift in the economic conditions” prevented its financial partner, Aberdeen, from raising the necessary funds for the venture originally launched in 2020.
The planned developments were to be located in Bromley, Reading and West Ealing. John Lewis has secured headline planning consent for all three projects and will complete final negotiations with local authorities before determining the sites’ future, which may include sale to property developers.
Economic pressures force retreat
Aberdeen confirmed its fundraising difficulties “reflect the realities of the environment” and described a “challenging UK market” between 2022 and 2025. The investment firm stated it maintains plans to expand its UK residential presence through existing partnerships.
“We have high conviction in build-to-rent in the UK and globally,” an Aberdeen spokesperson said. “Collaboration is vital to address the UK housing crisis and build-to-rent should be a healthy part of the property mix.”
A John Lewis Partnership spokesperson attributed the withdrawal to changed financial conditions: “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.”
Strategic shift under new leadership
The decision marks another departure from the diversification strategy established under former chair Sharon White, who was replaced by Jason Tarry, a former Tesco executive, in September 2024. Five years ago, John Lewis announced plans to build up to 10,000 rental homes as part of an ambition to generate 40% of profits from non-retail activities by 2030.
The company filed planning applications for the London and Reading projects in 2023 and prepared to manage tenancies at three sites developed by other parties.
John Lewis will continue to fulfil existing management contracts at four sites owned by parties linked to Aberdeen in Birmingham, Leeds, Leicester and Stratford. These arrangements will conclude gradually during 2025 and 2026.
Brendan Geraghty, chief executive of the Association for Rental Living, described the news as “deeply disappointing” and noted that John Lewis “brought something genuinely different to rental living – a trusted consumer brand, a service-first culture and a long-term commitment to quality.”
The partnership, the UK’s largest employee-owned business, stated the retreat from homebuilding forms part of a broader refocus on core retail operations, with significant recent investment in its John Lewis and Waitrose brands.
