Labour Government Confronted Over Rental Housing Strategy Following John Lewis Retreat
The Labour government is facing significant criticism for what industry leaders describe as insufficient attention to affordable housing development, with particular focus on the collapsing build-to-rent sector. The Association for Rental Living (ARL), representing the build-to-rent industry, has issued a stark warning to Chancellor Rachel Reeves, urging immediate intervention following John Lewis' decision to abandon its housing venture.
Open Letter Demands Urgent Policy Changes
In a strongly worded open letter addressed to senior Labour officials including Chancellor Rachel Reeves and Housing Secretary Steve Reed, the ARL has called for comprehensive reforms to the planning system and the establishment of mandatory rental home targets. The trade body emphasized that John Lewis' withdrawal from housebuilding should serve as a critical wake-up call regarding the severe challenges facing the rental housing market.
"Across the sector, schemes are being slowed, redesigned, or withdrawn completely," wrote ARL Chief Executive Brendan Geraghty. "Elevated construction costs, higher interest rates, softer yields, expanded Section 106 expectations and cumulative regulatory change have materially compressed margins to unsustainable levels."
John Lewis Exit Highlights Systemic Problems
The retail giant's decision to scrap its six-year-old housing initiative, which had delivered approximately 1,000 homes in Bromley, West Ealing and Reading, has sent shockwaves through the housing industry. Shadow Business Secretary Andrew Griffith characterized the move as "a major blow to the government's housing ambitions," noting that "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."
The ARL described John Lewis' reversal as "deeply disappointing news and a real loss for consumers," highlighting how economic pressures have forced even well-resourced corporations to retreat from housing development.
Specific Policy Recommendations
The Association for Rental Living has presented several concrete proposals to revitalize the build-to-rent sector:
- Reinstatement of multiple dwellings relief on stamp duty, which was abolished last year
- Development of a new regulatory and tax regime that "recognizes the economics" of large-scale rental development
- Prioritization of build-to-rent homes within national planning policy frameworks
- Creation of greater stability for institutional investors to properly assess and price risk
Geraghty warned that without immediate government intervention, the consequences would be severe: "slower housing delivery, reduced rental supply, increased affordability pressure and greater reliance on short-term or lower-quality housing stock."
Build-to-Rent Sector's Track Record and Potential
The ARL emphasized that the build-to-rent initiative has already delivered more than 146,000 professionally managed homes across the United Kingdom, demonstrating the sector's capacity to address housing shortages when properly supported. "This is exactly the form of housing the UK should be encouraging," Geraghty asserted in his letter to ministers.
The trade body expressed willingness to collaborate with the government, stating: "We stand ready to work with the Government to recognize, 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 incentivizes rather than thwarts institutional investment."
As the housing crisis intensifies, pressure mounts on the Labour government to demonstrate concrete commitment to rental housing development. The Treasury has been approached for comment regarding the ARL's proposals and the broader implications of John Lewis' exit from the housing market.
