John Lewis pulling out of build to rent - Is this a major vote of no confidence in the UK housing market?

The Private Rented Sector (PRS) has a supply crisis. Wednesday's news that the John Lewis Partnership (JLP) is walking away from its build-to-rent (BTR) ambitions — after six years of effort and not a single home built — is the starkest possible illustration of why.

If a business with the brand recognition, institutional backing, and planning consents that JLP had cannot make the economics of housebuilding work, the question every policymaker should be asking is: what does that say about the conditions we have created?

The answer is uncomfortable. And the people who feel it most are renters.

What happened, and why it matters

JLP announced on 25 February 2026 that it is withdrawing from its BTR property business entirely. The ambition, launched under former chair Sharon White in 2020, was to develop around 1,000 rental homes across three sites in Bromley, West Ealing, and Reading. JLP secured planning consent for all three and entered a £500m joint venture with Aberdeen to raise the funding. Aberdeen could not secure the investment.

JLP's own statement was clear on why: "Our rental property ambition was based on a very different financial environment" — one with stable returns, lower borrowing costs, and affordable construction. That environment no longer exists.

Six years of work. Planning won. A credible financial partner. And still the numbers couldn't be made to stack up. JLP is now expected to sell its consented sites to other developers and will wind down its property management contracts by 2027.

This is not a story about one retailer's strategic pivot. It is a story about the structural conditions facing everyone who wants to build homes in the UK right now.

The scale of the housing crisis in London

The backdrop to JLP's decision is a housing delivery picture that has deteriorated sharply — and in London, it has become a full-blown crisis.

According to an analysis published by the Centre for Policy Studies in January 2026, London saw just 4,170 new homes starting construction in 2024/25 — a 72% fall on the previous year. London local authorities started construction on a mere 90 homes during that period, a 95% collapse. Housing association starts in the capital fell 78%.

Put those numbers in context: London's annual housing target is 88,000 homes. On the current trajectory, the capital is on track to deliver around 5,000 in 2025 — just 5.7% of what it needs. Over this Parliament, London is expected to contribute 440,000 homes towards the government's 1.5 million target. Residential development consultancy Molior projects that just 9,100 homes will be completed across the entire two-year period of 2027 and 2028 combined. These numbers are startling.

London hasn't built so few homes since the aftermath of the Second World War. This is not a blip — it is a structural collapse in delivery.

The BTR sector, which had been growing steadily and diversifying housing supply, has stalled alongside everything else. Molior recorded just 37 BTR starts in London in the first half of 2025, compared with 2,626 in 2024 and a ten-year average of 5,600. JLP's exit is not an outlier — it is part of a pattern.

Renters are paying the price

Every development that fails to proceed is not simply a line on a spreadsheet. It is a home that doesn't exist for someone who needs it. And the pressure on the people who rent is already at a level our data at Goodlord describes as critical.

Goodlord's State of the Lettings Industry Report 2025 — drawing on the views of more than 2,750 agents, landlords, and tenants across the UK — found that 48% of tenants struggled to find a property over the previous 12 months. Two-thirds of letting agents (67%) reported rising tenant demand. Almost one in five landlords (19%) sold at least one property in the past year, shrinking an already constrained supply further.

The affordability picture is equally stark. Goodlord's Rental Index recorded a record high of £1,496 per month in July 2025, with the average renter now spending 40% of their take-home income on rent — the threshold we define as rent poverty. More than a third of tenants (37%) report having no savings or investments to fall back on.

This is the human cost of a market where demand has consistently and dramatically outpaced supply for years. When headline-grabbing schemes like JLP's BTR plan fail to materialise, it isn't an abstract policy failure. It directly widens the gap between the homes people need and the homes that exist.

What this signals about the 1.5 million homes target

The government's ambition to build 1.5 million homes over this Parliament is the right destination. The planning reforms introduced to date are a step in the right direction. But JLP's decision is one in a growing series of signals that delivery at the scale required remains deeply uncertain.

Housebuilding needs a predictable environment: manageable borrowing costs, affordable materials and labour, a planning system that doesn't consume years of capital before a spade enters the ground, and investor confidence that returns are viable. Right now, none of those conditions is fully in place.

The British Property Federation (BPF) has pointed specifically to the abolition of Multiple Dwellings Relief (MDR) in 2024 as a factor that stalled or directly hampered the delivery of up to 25,000 BTR homes. It is calling on the Chancellor to reinstate the relief. Whether or not that single intervention is the right answer, the direction of the argument is correct: the tax and financial environment for residential development is working against the very outcomes the government says it wants.

JLP didn't walk away from its housing ambitions lightly. It spent six years trying to make them work. The fact that it couldn't is a verdict on market conditions — not on the people who tried.

Why the outlook is more hopeful than it might appear

It would be easy to read all of this as unrelentingly bleak. But a more complete picture is worth holding onto.

Demand for rental housing is not going away. Our State of the Lettings Industry Report 2025 found that 40% of renters said they were unlikely to buy their own home within the next five years. For most people in the PRS, renting is not a transitional phase — it is where they live long term. That represents an enormous, durable base of demand that, with the right supply response, is a genuine opportunity for the sector.

The Renters' Rights Act — due to come into force in May 2026 — brings real operational challenges. Our data shows that 80% of landlords believe the abolition of Section 21 will have a negative impact on the PRS, and a third of all landlords (35%) have either sold or actively attempted to sell at least one property in the past 12 months. The legislation presents agents and landlords with a period of significant adjustment.

But legislation that raises standards, protects tenants, and creates a clearer long-term framework can also improve confidence over time. Tenants who feel more secure tend to stay longer. Lower turnover costs agents and landlords less. And institutional investors — the kind that could fund the BTR schemes the market desperately needs — tend to follow regulatory clarity, not precede it.

The conditions for a more confident, better-supplied rental market are buildable. The JLP story is a signal that the work to build them isn't done yet.

What needs to happen now

The 1.5 million homes target matters. But targets don't build homes — conditions do. If the government is serious about delivery, it needs to examine honestly why a business with the resources, the ambition, and the planning consents that JLP had still couldn't make it work. The answers aren't comfortable, but they are necessary.

For letting agents and landlords operating in the market as it stands: demand is real, supply is tight, and more change is coming. Goodlord's role is to help you navigate that — with the tools, insight, and support to keep your business moving forward regardless of what the market throws at it.

The PRS is under pressure. But it is also essential to millions of people. With the right policy environment, there is every reason to believe it can grow, improve, and deliver. The John Lewis story is a warning. It doesn't have to become a precedent.