Housing

John Lewis wants to provide affordable homes

As it seeks to make 40 per cent of its profits outside of retail activities, could affordable housing be the key for the department store giant?

John Lewis is aiming to provide affordable housing. Image credit: Mankind 2k / Wikimedia Commons

John Lewis is aiming to provide affordable housing. Image credit: Mankind 2k / Wikimedia Commons

Department store John Lewis is aiming to move into the housing market and provide affordable homes to stem it’s Covid-hit profit losses and help plug the gap in Britain’s acute housing shortage.

The employee-owned store announced record losses of £517 million during the pandemic and plans to close some of its 42 stores for good.

As a result, bosses renewed their commitment to move into areas outside of retail, including through the provision of affordable housing.

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“The past year has been one of the most challenging in the Partnership’s history,” the company told staff when announcing its latest financial results last Thursday.

“With retail margins declining and the partnership wishing to return more benefit to partners, customers and communities, we are aiming that, by 2030, 40 per cent of our profits will come from areas outside retail, namely financial services, housing and outdoor living.” 

Last year, the firm revealed plans to expand into the built-to-rent market by converting unused shop space into affordable homes. Planning is still in the early stages but it has identified possible sites.

Announcing its five-year Partnership Plan in October 2020, John Lewis said: “We’ve identified 20 sites we own that could be used to benefit local communities by providing quality and sustainable housing, while providing a stable income for the partnership.

“We’ll make planning applications for two of these in the new year in greater London. Entering the ‘build to rent’ market also allows us to furnish properties using John Lewis Home products and deliver Waitrose food.

“We’re a landlord already at three of our properties so this is an obvious extension for us. And we’re now talking to developers and investors who can help us achieve our ambitions.”

There is huge demand for affordable homes in the UK, with housing and homelessness charities warning of growing waiting lists and increasing numbers being placed in council-provided temporary accommodation. 

The latest figures show a total of 57,644 affordable homes were built in England between March 2019 and April 2020, but Shelter chief executive Polly Neate described it as a “drop in the ocean”. 

In September last year, the Government launched what it called the “highest single funding commitment to affordable housing in a decade”, with councils, housing associations and private providers invited to bid for funding to deliver homes in 2021. 

John Lewis is not the only retailer hoping to enter the housing market. 

Swedish furniture store IKEA built cheap housing for its Icelandic staff in 2017 to show it is possible to build genuinely affordable homes. 

IKEA also co-owns BoKlok, a developer specialising in affordable properties. In June 2019, the firm had signed a deal with Worthing council in West Sussex to build low-cost modular housing units in the South fo England. 

Kush Rawal, director of residential investment at Metropolitan Thames Valley Housing, which provides housing at different levels of affordability across England, said it was “encouraging” that John Lewis and other big players were aiming to enter the market. 

 “The country is in the midst of a housing crisis, and there is a real lack of affordable housing,” Rawal said.

“It is encouraging to hear plans for John Lewis to seek to provide more affordable housing in lieu of reopening some of its stores, and we hope this is a step in the right direction for the affordable housing sector to work collaboratively and deliver a high volume of quality, genuinely affordable homes to those who truly need it.”

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