John Lewis cancels £500m UK rental homes project amid market challenges

Published: 26 February 2026. The English Chronicle Desk. The English Chronicle Online.

The John Lewis Partnership has announced it is abandoning a £500m plan to build almost 1,000 homes for rental in key UK locations. The scheme, which targeted Bromley, Reading, and West Ealing, had been in development since 2020 but is now deemed unfeasible due to a cautious property market and shifting economic conditions. The decision reflects broader challenges in UK housing finance and the difficulty for investors to secure long-term funding in the current environment.

The retailer, which also owns Waitrose supermarkets, explained that the project had encountered obstacles linked to its financial partner, Aberdeen, whose fundraising efforts were affected by the changing economic landscape. Aberdeen stated that its struggles were a direct reflection of the realities facing the UK property market between 2022 and 2025, highlighting tighter lending conditions and increased costs for large-scale residential developments. Despite these difficulties, the investment firm confirmed that it remained committed to growing its presence in the UK build-to-rent sector through ongoing partnerships and alternative projects.

A spokesperson from Aberdeen emphasised the firm’s continued belief in the build-to-rent model, noting that collaboration between private investors and trusted brands remains essential to addressing the UK’s ongoing housing crisis. They added that build-to-rent properties are an important component of a healthy property mix and a means of providing long-term stability for tenants, even amid economic uncertainty.

Brendan Geraghty, chief executive of the Association for Rental Living, described John Lewis’s withdrawal as “deeply disappointing” and a significant loss for renters who had anticipated a new approach to residential living. He highlighted the company’s reputation for delivering high-quality, service-driven experiences in retail, which had offered hope for similar innovation in the housing sector. Geraghty argued that the withdrawal left a gap in the market for trusted consumer brands applying a service-first culture to the rental experience.

The John Lewis Partnership confirmed that this strategic shift aligns with a broader refocus on its core retail operations, moving away from the diversification strategy previously championed under former chair Sharon White. Jason Tarry, who succeeded White in September 2024 and previously held senior roles at Tesco, has prioritised strengthening the company’s retail brands and balance sheet. Analysts suggest that this retreat from homebuilding represents a cautious recalibration of resources amid an unpredictable economic landscape and changing consumer patterns.

The project’s cancellation marks a departure from the ambitious vision announced five years ago, when John Lewis planned to develop up to 10,000 rental homes and generate 40% of profits from non-retail activities by 2030. Initial planning applications had been submitted for multiple sites across west and south-east London, and the company had prepared to manage tenancies at homes developed by other partners. Despite progress on approvals, the uncertainty of construction costs and borrowing rates ultimately undermined the long-term viability of the scheme.

John Lewis has stated that it intends to complete existing contractual obligations at four sites owned by other parties associated with Aberdeen, including properties in Birmingham, Leeds, Leicester, and Stratford. These agreements are expected to conclude gradually over 2026 and 2027, after which the company will fully exit the build-to-rent sector. The Partnership confirmed that discussions with local authorities regarding potential future options for the Bromley, Reading, and West Ealing sites are ongoing, including possible sales to other property developers.

A spokesperson for John Lewis explained that the original ambition for rental housing was predicated on a financial climate that has since shifted dramatically. Lower borrowing costs and predictable investment returns initially made large-scale build-to-rent schemes feasible, but current conditions of elevated interest rates, inflationary pressures, and general market caution have rendered the model unviable. The spokesperson emphasised that the company’s primary focus remains delivering exceptional value and service through its retail operations, particularly within the John Lewis and Waitrose brands.

The spokesperson added that since the initial announcement in 2020, the Partnership had achieved substantial progress in strengthening its retail strategy. Investments have focused on improving customer offerings, simplifying operations, and consolidating financial resilience, which have collectively helped secure the company’s position amid ongoing economic volatility. The retreat from build-to-rent, therefore, represents a redirection rather than a complete abandonment of growth ambitions, reflecting prudence in response to market conditions.

Industry experts note that the cancellation underlines the broader challenges faced by large-scale residential developments in the UK. Between rising construction costs, interest rate hikes, and the financial pressure on institutional investors, ambitious projects often struggle to meet projected returns. Analysts also suggest that the decision demonstrates the difficulties consumer-facing brands encounter when extending their trusted reputations into sectors requiring long-term capital commitment and operational expertise, such as housing.

Despite this setback, Aberdeen remains committed to the UK build-to-rent sector, indicating that investment in rental properties will continue under existing partnerships. The firm emphasised that collaboration and innovation remain essential to delivering quality rental housing, particularly in high-demand areas. Market commentators argue that while John Lewis’s withdrawal may slow progress in specific developments, the sector overall continues to attract institutional interest due to persistent demand for quality rental homes.

For residents who had anticipated the new rental offerings, the news is a disappointment, but experts highlight that alternative solutions are emerging. Other private landlords and property developers continue to expand the build-to-rent portfolio, and the UK government has repeatedly encouraged long-term investment in affordable housing. The cancellation also serves as a cautionary note regarding the financial volatility inherent in such large-scale projects, reinforcing the need for adaptable business models and robust funding strategies.

John Lewis’s departure from the sector may also signal a broader trend among UK retailers and consumer brands reconsidering diversification beyond core business operations. As inflation and borrowing costs remain elevated, companies are increasingly focused on shoring up existing strengths rather than pursuing ambitious expansions into capital-intensive industries. The move is therefore viewed as a strategic decision to consolidate resources, preserve financial stability, and maintain customer confidence in the John Lewis and Waitrose brands.

While the build-to-rent project will not proceed, the Partnership’s commitment to retail innovation remains evident, with ongoing investments in technology, logistics, and customer experience. Analysts predict that this focus on core operations will allow John Lewis to strengthen its market position and adapt more effectively to changing consumer behaviours. The company’s decision highlights the need for flexibility in long-term strategic planning, particularly when external economic pressures are unpredictable.

In conclusion, John Lewis’s withdrawal from its £500m build-to-rent scheme represents a careful reassessment of priorities in a volatile economic climate. Rising costs, higher interest rates, and fundraising challenges led to a shift away from residential development while maintaining a strong commitment to retail operations. Although disappointing for prospective renters, the move underscores the company’s focus on sustainable growth, strategic prudence, and continued investment in its core brands. As the UK housing sector adapts to financial pressures, other investors are expected to fill gaps left by major brands, sustaining momentum in build-to-rent initiatives across key urban centres.

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