The John Lewis Partnership has withdrawn from its Build to Rent business that pledged to provide 1,000 rental homes in Bromley, Reading and West Ealing.
Launched in 2020, the £500m venture aimed to deliver residential rental properties through the Partnership’s collaboration with its financial partner, Aberdeen.
However, a ‘fundamental shift in the economic conditions’ has been cited as the reason for the Partnership having pulled out from its Build to Rent property business.
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.’
They added that the move is part of a wider strategic decision to ‘invest significantly’ in its core retail brands, John Lewis and Waitrose.
Details of the consents at Ealing, Bromley and Reading are being finalised with the councils, the Partnership has confirmed, with a view to examine how housing could be delivered on the sites through another party.
The Association for Rental Living (ARL) commented that the withdrawal is ‘deeply disappointing news and a real loss for consumers’.
Emphasising the credibility and determination of the Partnership, the ARL has argued that factors such as the inflation of construction costs and increased borrowing costs, an ‘unwieldly planning system, and the implementation of legislation such as the Building Safety Act and Renters’ Rights Act have created challenges for investors.
The ARL has called for ‘institutional investment in high-quality rental homes’ to meet the Government’s housebuilding targets, stating that ‘when a brand as well-known and well-resourced as John Lewis concludes that the economics no longer work, ministers need to sit up and think very carefully about how they respond’.
Following the Partnership’s announcement, the ARL has also issued an open letter to the Government urging ‘immediate support for the UK Build to Rent sector’ to drive investment in new rental homes.
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