Is it a good idea for John Lewis to enter the rental market?

Supermarket chains like John Lewis and banks like Lloyds – both entering the private rental sector as large scale landlords – could end up destroying their reputations.That’s the view of tax and advisory firm Blick Rothenberg.Heather Powell, a partner at the firm and head of property, says: “Many retail groups who have invested in property  have surplus property, and are considering what they can do with these properties.

“Disposal to a developer is  a simple option, but building homes on surplus sites, which will generate a reliable, future income stream, is very attractive, and could guarantee the future of the business.  Many Retailers are looking at recent headlines and asking, ‘Is it time to become a landlord?’”She adds: “An increase in quality homes available for long term rental is welcome.  However new landlords need to be aware of the challenges of renting homes.“The legislation governing the rental of UK properties has become increasingly complex. New entrants to the market need to consider whether they employ an in-house team or outsource the management of their properties, and factor in the costs of this work when considering whether to become a landlord. It is not simple, and it can go wrong.”

Powell warns that if there is insufficient investment in a competent property management team, reputations could be shattered, especially if tenant unhappiness reaches the media.

“Examples of this strategy are already in the public domain. John Lewis are planning to build 10,000 rental homes in partnership with established developers on sites vacated by their stores, car parks or above Waitrose supermarkets. Lloyds Bank are reported to be about to complete on the purchase of a block of 50 flats in Peterborough that they will rent out, and it is expected that their portfolio could eventually include homes on sites vacated by branches that have now closed.”

Powell concludes: “The fight to acquire Morrisons would appear to be fuelled by ownership of the group’s large property portfolio. One of their potential buyers, Fortress, have pledged that they will not sell of the stores. This pledge does not stop redevelopment of non-performing sites – and diversification into homes for rental would appear to be one of the best options.”



New How to Rent Guide issued

The new How to Rent Guide has been issued today (Monday October 2nd 2023).  It can be seen here. The latest update is...

Twitter feed is not available at the moment.


Submit a Comment