Mortgages.scot

When John Lewis announced it was building homes last year, it raised a few eyebrows. But many are warming to the idea with some reservations. A high street retailer diversifying into home building seems likely to have complications. Especially when you add that they are not homes for sale. They intend to become the largest landlord in the UK outside of local authorities and housing associations.

Why are they moving in this direction?

They claim the intention is to address the housing shortage across the country and support local communities. Providing tenants with the option of fully furnished or unfurnished homes. The plan is for all properties to have a concierge and Waitrose store on site. They want to raise standards in the rental market, and they could well have a significant impact in this area.

Whilst there is intent to build new homes on new sites but the bulk will use their existing portfolio. The suggestion is that around 7,000 homes will be built on sites where there is already a Waitrose store, within car parks and even above stores themselves.

Of course, there is a financial element for John Lewis. They get rental income which provides a fairly stable source of income, furnished properties will no doubt come from their John Lewis stock creating sales for that part of the business and a range of other advantages and benefits.

It also means more efficient use of all the existing land they have. So a win-win for them. Especially on currently unused sites, they own.

It's a diversification strategy that may well prove very successful. Who knows, it could encourage other retailers with large sites across the country to follow. Sounds a bit like the time many retailers (Tesco, M&S, Asda, Sainsbury) started offering a banking service, with mixed success.

The first locations announced

Recently they have announced the first three sites to be developed.

1. A supermarket in West Ealing will be rebuilt to add accommodation above the store.
2. A supermarket in Bromley is to have units added.
3. Another site in Reading that was a collection point, currently disused will be developed.

The first property in West Ealing is expected to be available in around 18 months. It will be interesting to see what that looks like as it moves along.

A welcome option for tenants

Anything that brings affordable, well-managed rental accommodation to the market should be welcomed. Having a good landlord is something that still appears to be too much hit or miss in the market at present. John Lewis should be able to provide a good service, quality property with a quick efficient support service for their tenants.

More to follow as we see how the first development turns out.