No longer a family affair?

One of the UK's best known retail brands has announced plans to retreat from its much-vaunted plans to enter the UK housebuilding market. John Lewis's withdrawal from multifamily build-to-rent (BTR) housebuilding has been received by the market as more than an internal strategy pivot but, rather, an indictment of the current policy and economic environment.

When launched in 2020, the plan was hugely ambitious: to deliver thousands of new rental homes above and around existing John Lewis and Waitrose stores, turning underused land into long-term, professionally managed housing aligned to one of Britain's most trusted brands. In a low-interest-rate world, it looked like textbook "patient capital" meeting a chronic housing shortage.

Six years on, that logic has unravelled. Today's macroeconomic and legislative landscape has rendered the programme unviable through a perfect storm of construction inflation, higher financing costs and increased regulatory complexity.

The mixture of regulatory and legislative barriers now facing multifamily BTR developers means that even the most compelling projects struggle to attract investment. The industry and onlookers will be saddling the Government with much of the blame.

As the trade body for the rental sector, the Association of Rental Living, put it: "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. The UK needs institutional investment in high-quality rental homes - it is not a nice-to-have, it is essential to meeting the government's own housing targets."

The underlying logic remains unflawed. There is a clear requirement to deliver homes, and the principle of utilising the space above town-centre supermarkets is sound. Done properly, planning and policy interventions could unlock exactly the types of sites owned by the likes of Waitrose, Asda, Tesco and Sainsbury's - as well as public sector landowners - in towns and cities across the UK.

While this is deeply disappointing news for the sector, there is still a wall of capital seeking exposure to rental housing and a number of operators continuing to build successful platforms. However, future success in the BTR arena will involve treating John Lewis retreat not as a one-off disappointment, but as an opportunity to unlock current barriers to development and disincentives to invest. With some of the industry's best minds due to descend on Cannes for the latest edition of Housing Matters at MIPIM, here's hoping some pragmatic solutions are forthcoming.