Very soon, however, not just the goods will be provided by John Lewis but the address to which they are being delivered may have been as well.
Yes, the iconic High Street name has announced plans to move into the rental property market. And it won’t just be dipping its toe in the water either; although there were hints some time ago that the company was moving in this direction, it was initially felt that involvement would be relatively small scale but it now appears that the intention is to build 10,000 homes for rent, 7,000 of which would be on sites in the existing property portfolio but with others constructed on entirely new sites.
The properties would range from studio flats to houses with all developments complemented by a concierge service and a Waitrose convenience store near the entrance. They will be a mixture of furnished and unfurnished with tenants choosing the latter offered packages that include furniture and furnishings from the John Lewis Home range, although this presumably will be optional rather than conditional.
John Lewis is certainly a strong brand – perhaps the most recognisable, along with Marks & Spencer, among the non-convenience sector on the High Street – and that on its own will help market the properties. Nevertheless it still begs the following question: why enter a market where providers (i.e. landlords) have seen income tumble due to the pandemic-related problems of their consumers (i.e. tenants)?
I assume market research by John Lewis has already allayed these fears but perhaps the company also shares an “instinct” with established property professionals that the adverse effect of covid-19 on rental property may only be temporary.
We’re constantly being told the pandemic has changed working practices for ever; that freed from the morning and evening commute, more employees will demand to be permitted to work from home for at least part of the week and, even more importantly, employers will think this to be in their own best interests as well.
But this new transience may not be restricted just to home and office but extended to hybrid working between various offices, either for the same employer or in a situation where people change jobs more frequently. Such an outcome clearly implies an increased demand for rental property among people at all levels of work.
The pandemic has also changed social attitudes but there is one thing it has not altered: the desire of young adults to live independent lives away from the parental home while – somewhat ironically – the age at which people secure their first mortgage is continuing to increase. The latter is due to several reasons, e.g.: some want to enjoy life “mortgage-free” if only for a limited period; others find it takes several years to save for the size of deposits required nowadays; still others expect to enjoy a longer – and healthier – lifespan than their parents and grandparents and therefore are unfazed about not becoming owner-occupiers until later in life.
This does not include that section of the population (a small minority, but growing) who have decided to follow the European example and take advantage of the flexibility private long-term renting offers while building a nest for later life by means other than a “main home” – but that’s another story.
All of which means that despite what has happened recently, rental accommodation will continue to be vital for a large section of the population and this has no doubt driven the John Lewis decision.
It will be interesting to see if the company makes the claim that homes, like its other products, are “never knowingly undersold”.
David Alexander is managing director of DJ Alexander