John Lewis abandons plan to build 10,000 homes

Hannah Boland

Thu, February 26, 2026 at 1:52 AM GMT+9 5 min read

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John Lewis had been planning to build three rental home tower blocks

John Lewis has abandoned plans to build 10,000 homes after struggling with planning red-tape and inflation.

The retailer said it will withdraw from its build-to-rent business, blaming higher interest rates, inflationary pressures and a more cautious property market.

John Lewis said this meant the plan to build and manage flats “no longer meets” its investment criteria, adding: “Our rental property ambition was based on a very different financial environment.”

The partnership had been planning to build three rental home tower blocks under a £500m joint venture with Aberdeen.

However, it is now planning to sell consents for the schemes – subject to final approvals and following discussions with local authorities – with outside developers expected to be brought in.

It brings an end to John Lewis’s ambitions to ultimately build 10,000 rental homes across the UK.

Britain’s sclerotic planning system is understood to be a major factor in John Lewis’s about-turn.

Katherine Russell, the director of build-to-rent at the John Lewis Partnership, previously told The Telegraph that “cutting red tape” would speed up investment in new housing and called for Rachel Reeves to introduce tax breaks for developers.

Property experts have complained of delays caused by the Building Safety Regulator, which was introduced following the Grenfell Tower tragedy. Enquiries by the watchdog added between 12 and 18 months to project timescales last year.

Separately, 77pc of new-build applications for so-called “higher-risk buildings” – those over seven storeys high – tabled between late 2023 and early 2025 were rejected, deemed invalid or withdrawn, the BSR’s own data shows.

Industry sources also bemoan a raft of new legislation that has made it less attractive to be a landlord, with the Renters’ Rights Act singled out as particularly burdensome.

The new rules, designed to give tenants stronger rights, include the abolition of “no-fault” evictions, limiting rent increases to once per year, and the right to challenge any rent rise deemed unreasonable at a tribunal.

Landlords warn that the regulations, scheduled to come into force in May this year, will make it harder to raise capital for new schemes and more difficult to to value existing ones.

John Lewis’s decision to exit the housing business marks the latest move to roll back a strategy to diversify its business away from high street retail, championed by Dame Sharon White, its former chairman.

Dame Sharon set a target to make 40pc of profit from areas outside retail, including housing and financial services, by 2030, after she took over as chairman of the John Lewis Partnership in 2020.

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However, by March 2024, John Lewis had scrapped that target following years of ballooning losses. At the time, it said it would turn around its business by pursuing a “relentless focus on retail”.

Dame Sharon stepped down as chairman of the partnership in September 2024 and was replaced by Tesco veteran Jason Tarry. He has been spending heavily on revamping tired John Lewis department stores and opening new Waitrose supermarkets, with the company investing £1.8m in stores.

Clive Black, a Shore Capital analyst, said: “John Lewis’s decision to enter the residential property market was noteworthy, not least because at the time the firm was notably struggling as a retailer.

“Under Jason Tarry, sanity is now prevailing, so better and necessary focus upon the core, uplifting what is a premium retail business after all. Encouragingly, Waitrose is showing good signs of progress whilst there is renewed energy around John Lewis, which partners will be hoping augurs well.”

Project setbacks

The partnership had been developing three housing projects, one in Reading and two in London.

John Lewis had been progressing three housing projects, one in Reading and two in London

In October, John Lewis received planning approval for its rental home scheme in Reading, following earlier approval in West Ealing, in west London, and Bromley, in south-east London.

The projects were part of its £500m, multi-decade joint venture with investment company Aberdeen, aimed at delivering around 1,000 new homes across the three locations.

Abedeen had initially said it would secure £500m from institutional investors for the projects, although that funding was never raised due to the tougher macro-economic conditions.

All three of the schemes faced setbacks, including local opposition to the level of affordable housing in the tower blocks and concerns from NHS officials about the capacity of nearby GP surgeries.

Previous analysis for the rental home schemes, seen by The Telegraph, suggested John Lewis risked spending more on constructing the flats than they would be worth. In 2023, The Telegraph revealed that its West Ealing project was set to deliver a negative return of £57m.

John Lewis argued at the time that it was able to take “a longer-term view”, saying that it wanted to “create as many affordable homes as we can for key workers such as nurses, teachers, the police and care providers”.

John Lewis always maintained that it wanted to “create hundreds of homes at a time; there’s a desperate need for more housing and local investment to support economic growth”.

The retailer is understood to be in talks with local authorities over the change to the schemes. It still needs to finalise consents before it can look at its options for the projects.

John Lewis is also withdrawing from its management of other rental homes. In its build-to-rent business, it manages a number of properties owned by Aberdeen. It said it would fulfil its existing management contracts before handing over to another manager.

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