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John Lewis Partnership has decided to withdraw from its build-to-rent (BTR) property business, citing a fundamental change in the economic conditions that originally supported the venture. The employee-owned retailer entered the residential rental segment in 2020 as part of a diversification strategy aimed at reducing reliance on retail revenues. However, higher borrowing costs, weaker investment returns and increased construction expenses have made the business model unviable in the current environment. The decision forms part of a broader strategic reset under executive chair Jason Tarry, with the group refocusing on its core retail operations, including John Lewis department stores and Waitrose. While no homes were ultimately built, the partnership progressed several planning applications and managed third-party rental properties during its brief foray into the sector.
The John Lewis Partnership has announced its exit from the build-to-rent property sector, drawing a line under a diversification strategy launched six years ago that sought to expand the group's income beyond traditional retail. Advertisement
The UK's largest employee-owned business said the withdrawal reflected a significant shift in the financial and economic landscape since the initiative was conceived in 2020. According to the partnership, the original business case was based on expectations of stable investment yields, relatively low borrowing costs and more affordable construction expenses assumptions that no longer hold in the current market.
The decision comes as part of a wider strategic realignment under executive chair Jason Tarry, who took on the role with a mandate to strengthen the group's core retail brands. The partnership operates John Lewis department stores and the premium grocery chain Waitrose, both of which have faced sustained pressure from changing consumer behaviour, rising costs and intensifying competition.
The move marks a clear departure from the strategy pursued under former chair Sharon White, who had set an ambition for up to 40% of the partnership's revenues to come from non-retail activities. Property development, particularly in the build-to-rent segment, was identified as a key pillar of that diversification drive.
In a statement, a partnership spokesperson said the rental housing ambition had been shaped by a markedly different financial environment. They noted that rising interest rates and escalating build costs had fundamentally altered the risk-return profile of large-scale residential development, making continued investment in the sector unattractive.
Despite exiting the business without completing any homes, the partnership said it had made progress during its involvement. Three planning applications covering around 1,000 rental homes were advanced, and the group also managed build-to-rent properties owned by third parties across four locations. The spokesperson said the organisation remained proud of the groundwork laid during this period, even though the wider strategy had since changed.
Since taking the helm, Tarry formerly a senior executive at Tesco has prioritised modernising John Lewis and Waitrose stores, strengthening digital capabilities and improving supply chain efficiency. These initiatives are intended to restore profitability and sharpen the group's competitive position at a time when UK retailers continue to face subdued consumer spending and operational cost pressures.
The partnership is expected to publish its full-year financial results next month, which are likely to provide further insight into the impact of the strategic shift and the progress of its retail-focused turnaround efforts.
Source - Reuters
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