Labour accused of ignoring rental housing
Chancellor Rachel Reeves has been warned she must “take sharp notice” of the collapse of John Lewis’ housing venture by investing immediately in the build-to-rent sector.
The Association for Rental Living (ARL), the body which represents the build-to-rent sector, has sent an open letter to senior Labour figures calling on the government to develop a new planning system and set mandatory rental home targets.
Retail giant John Lewis announced its shock move to shut its house building venture on Wednesday, which the shadow business secretary dubbed a “major blow” to the government’s housing ambitions.
The trade body is calling on Labour to treat John Lewis’ U-turn as a wake-up call to the rising construction costs, high interest rates and falling yields which it says is slowing build-to-rent housing projects across the country.
John Lewis U-turn ‘deeply disappointing’
The ARL described the retail giant’s reversal as “deeply disappointing news and a real loss for consumers”.
Chief executive Brendan Geraghty has written to top Labour officials asking them to prioritise build-to-rent homes within planning policy and devise a new regulatory and tax regime which “recognises the economics” of large-scale rental.
The open letter was sent to Chancellor Rachel Reeves and housing secretary Steve Reed among other senior Labour ministers and MPs.
Reeves should reinstate the multiple dwellings relief on stamp duty which was abolished last year, Geraghty said.
He wrote: “Across the sector, schemes are being slowed, redesigned, or withdrawn. Elevated construction costs, higher interest rates, softer yields, expanded Section 106 expectations and cumulative regulatory change have materially compressed margins. Institutional capital requires stability to price risk.
“Without intervention, the consequences are clear – slower housing delivery, reduced rental supply, increased affordability pressure and greater reliance on short-term or lower-quality stock.”
Developers ‘ready to work with Labour’
The ARL says the build-to-rent initiative has delivered more than 146,000 professionally managed homes and can build far more.
“[This] is exactly the form of housing the UK should be encouraging,” he said.
Geraghty told ministers: “We stand ready to work with the Government to recognise, redefine and revalue what Build to Rent delivers for society, communities and the housing market as a whole, and to create a housing system that incentivises rather than thwarts institutional investment. Let’s seize the opportunity together.”
John Lewis Group’s scrapped housebuilding plans came only six years after the scheme was launched in 2020.
The scheme had built 1,000 homes in Bromley, West Ealing and Reading but had faced criticisms over the number of affordable homes that would be included.
John Lewis said it was axing the plans after economic pressures became too much to bear, and said it would instead focus on its retail ventures.
Reacting to the news, shadow business secretary Andrew Griffith told Morning Wire: “This is a major blow to the government’s housing plans. Higher employment and raw material costs and lower demand have killed the hopes of even a big firm like John Lewis investing in the sector.
“This government doesn’t understand business and it shows.”
A spokesperson for HM Treasury said: “We’re backing the build to rent sector – boosting access to finance through our £2 billion Private Rented Sector Guarantee Scheme, and investing in new build to rent homes through our £2.1 billion Home Building Fund.
“We have also reformed planning rules to require councils to plan for more build to rent homes, as part of our mission to deliver 1.5 million new homes.”