John Lewis Partnership had £500 million, prime development sites, and plans to build 10,000 rental homes.
They built zero before abandoning the entire venture.
When one of Britain’s most respected retailers can’t make construction economics work, that tells you everything about the state of UK building right now.
The Numbers That Killed the Dream
John Lewis launched its property arm in 2020. In 2022, it announced a joint venture with Aberdeen (now Abrdn). The plan: unlock value from surplus Waitrose land, build around 1,000 homes across three sites, create a £500 million property portfolio.
Former chair Sharon White pushed hard for diversification. She wanted 40% of the partnership profit to come from outside retail. That target is now abandoned.
The company says the venture was based on “a very different financial environment.” Translation: the math stopped working.
Here’s what changed:
Borrowing costs roughly doubled since 2021. The Bank of England’s base rate went from 0.1% in December 2021 to 5.25% by August 2023. Commercial loan rates followed suit, making development financing dramatically more expensive than when the plans were launched.
Construction materials went through the roof. The cost of concrete, steel, insulation, and timber increased dramatically, some by more than 60% since 2020.
The BCIS projects tender prices will increase by about 15% by 2030, with building expenses climbing an additional 14%. Even as inflation moderates to 3%, costs aren’t reducing. They’re just rising more slowly.
That’s the structural problem. Construction inflation isn’t cyclical. It’s baked in.
Planning Delays Compounded Everything
Financial pressure was only part of the story.
John Lewis faced severe planning challenges that stretched timelines and multiplied costs. In May 2025, JLP won an appeal to redevelop its Waitrose West Ealing site after being forced to launch an appeal a year prior on grounds of ‘non-determination’ by the local planning authority. They’d originally submitted plans in July 2023.
Two years to get planning permission for a single site.
The Bromley scheme tells a clearer story. In 2022, the partnership unveiled plans for this 353-home development as its flagship project. By July 2023, they admitted they’d struggle to meet the recommended 35% affordable housing provision. Rising build costs forced them to cut that to 20%.
When you’re cutting affordable housing targets because the economics don’t work, something fundamental has broken.
What Industry Experts Say
“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.”
That’s Brendan Geraghty, CEO of the Association for Rental Living. He’s not wrong.
Legislation has made it harder for investors to underwrite the predictable income growth that rental housing requires. The Building Safety Act and particularly the Renters’ Rights Act changed the game.
For private landlords, this validates concerns about costs, taxation, and regulation that individual landlords have raised for years. Even deep-pocketed institutions are finding rental investment challenging.
The Broader Construction Crisis
John Lewis isn’t alone in struggling.
Construction accounted for one in nine business insolvencies in the UK in 2023. Insolvency rates are at all-time highs.
When ISG collapsed in 2024, more than £700 million was owed to suppliers and subcontractors. That’s not just one company failing. That’s a ripple effect that damages dozens of businesses down the supply chain.
The viability challenges extend across the sector. You can have the best brand recognition, the deepest pockets, and access to prime development sites. None of that matters when the economics don’t work.
What Happens Next for John Lewis
Under the new chair, Jason Tarry, the partnership is refocusing on what it knows: retail.
They’re investing roughly £800 million in John Lewis and about £1 billion in the Waitrose estate. They’re pursuing new retail partnerships to strengthen the balance sheet.
Tarry said the Partnership “has the right plan focused on retail.” The business is back to being run by retailers, not diversification strategists.
John Lewis will continue fulfilling management contracts at four existing residential sites as it exits the sector. They’re maintaining their position as a committed landowner while transitioning out of the build-to-rent business.
That’s a responsible exit. But it’s still an exit.
The Lessons for Construction Professionals
Three clear takeaways from this failure:
Financial modeling needs to account for volatility. Projects that look viable in a low-interest-rate environment can become unworkable fast. Assumptions about borrowing costs, material prices, and construction timelines need serious stress testing.
Planning delays kill projects. Two years to get planning approval isn’t just frustrating. It’s financially devastating when you’re carrying land costs, paying interest on development loans, and watching construction prices climb.
Core competency matters more than you think. John Lewis has decades of retail expertise, strong brand recognition, and substantial financial resources. None of that translated into construction success.
The skills required to develop property at scale are different from the skills required to run retail operations. That gap proved unbridgeable, even for a well-resourced organization.
What This Means for the Industry
When established players with deep pockets walk away from development opportunities, that sends a signal.
The UK needs more housing. The government wants more build-to-rent development. But the economics need to work for investors, developers, and construction firms.
Right now, they don’t.
Interest rates, construction costs, planning delays, and regulatory requirements have created an environment where even favorable projects struggle to pencil out.
You can’t solve a housing shortage when investors with money and land decide the returns don’t justify the risk.
The Path Forward
The government shouldn’t make development easier by cutting safety standards or affordable housing requirements.
But something has to change.
Planning processes need to move faster. Construction cost inflation needs to stabilize. The regulatory environment needs to provide enough certainty that investors can model returns with confidence.
Otherwise, you’ll see more stories like John Lewis. More ambitious plans that never break ground. More capital flowing elsewhere.
The construction industry doesn’t need more press releases about housing targets. It needs the structural conditions that make those targets achievable.
John Lewis had the resources, the land, and the intention. The industry conditions made it impossible.
Until those conditions change—faster planning, stabilized costs, regulatory certainty—you’ll keep watching capable organizations walk away from projects that should work but don’t. The housing shortage isn’t a construction problem. It’s an economics problem that construction can’t solve alone.
