By Nick Bano, Joe Bilsborough, Lily Gordon Brown and Isaac Rose
“I’m very proud to support John Lewis”
Sir Keir Starmer
“I love John Lewis”
This month saw the eye-catching news that the John Lewis Partnership – purveyors of furnishings to the Parliamentary class – is setting its sights on the residential property market. The company is considering setting itself up as a large-scale build-to-let concern, possibly by building flats above retail space. What does this tell us about the housing crisis, capital and the economy? What does it tell us about the nature of rent extraction in the UK?
The first and most obvious conclusion is that John Lewis thinks that this is going to work. They are no fools: they have been running successfully for more than 150 years, and they are now giving us a clear indication that they see profits in residential property. This is understandable, as town centres are gutted of retail spaces and the value of commercial buildings (particularly office space) is threatened by the pandemic.
Any fool, though, can see that housing is profitable. What’s more interesting is the optics of the company’s expansion, and what it shows us.
John Lewis has been the darling of the middle class and commentariat for many years. The 2010 Parliamentary expenses scandal centred around the ‘John Lewis list’: their merchandise had a sort-of ‘Goldilocks’ status of being plush enough for an MP’s flat, while not being so extravagant that it would be embarrassing to claim it on expenses. During the 2015 election the ‘John Lewis test’ was identified by Tristram Hunt (then a Labour MP, now engaged in a bitter dispute about sacking dozens of his workers and outsourcing their roles – a very un-John Lewis policy). The ‘John Lewis test’ asked whether the Labour Party was doing enough to woo John Lewis’s ‘aspirational’ class of shoppers. Then, after Boris and Carrie Johnson’s high-end renovation of the Downing Street flat, the party leaders publicly fawned over the company when Keir Starmer ham-fistedly argued that their wares ought to have been good enough for a head of government.
The rental market now has a reputable supplier. As home ownership becomes an increasingly remote prospect even for wealthier people, and renting becomes inevitable, John Lewis has stepped into the breach. If the well-to-do are to be forced to rent – if the ambition can no longer be home ownership – then there has to be a form of renting that caters for them. A respectable landlord for the genteel renter. Indeed, the suggestion is that a John Lewis flat would come with the option of having John Lewis furniture, and a Waitrose on the doorstep.
This, perhaps, tells us something about the increasing socio-economic segmentation within the renting population. The rental sector is not a homogenous mass of buy-to-lets. Instead, we are increasingly seeing rental projects that specifically target particular demographics: ‘co-living’ arrangements; monstrous planning applications for expensive student accommodation; the ‘guardianship’ industry; higher-end build-to-lets; and companies that seem to specialise in exclusive prefabricated communities. And within this new large and socially variegated rental sector, John Lewis seems to have anticipated demand for fully-furnished and decorated ‘Instagrammable’ new-builds.
It is notable that John Lewis sees its future in build-to-let, because this is at odds with the government’s emphasis on increasing home ownership (fostered by mortgage support schemes, which tend to be targeted at new-build homes). This might suggest that the company doesn’t think the government will succeed. John Lewis has placed its bet on the growth of an emerging form of higher-end landlordism, which is inconsistent with a shrinking rental sector, and more consistent with the idea that more and more people in their 20s, 30s and beyond are going to need to keep renting.
Given its cachet as a ‘respectable’ firm, as well as the increasingly complex dynamics and class interests within the renting population, the more cynical among us might also see John Lewis’s move as an interesting attempt at undermining the groundswell against landlordism. It might be more difficult to make the case that ‘all landlords are bastards’ (a slogan couched in more measured and persuasive terms in these excellent pieces by Tristan Cross and Tom Lavin) if the ranks of landlords include a beloved workers’ cooperative: aspirational but not elitist; successful but worker-friendly; a far cry from the vicious and cold-hearted landlord of the popular imagination.
The key point of Cross’s and Lavin’s pieces is that there can be no such thing as a good landlord because landlordism is inherently exploitative. This truth sits uncomfortably with John Lewis’s traditional claim that its model is a gentler form of capitalism, in which cooperative ownership smooths over the exploitation that takes place between companies and their workers. But there is no suggestion that John Lewis will export this commitment to cooperative principles to its housing arm. By becoming a landlord, the company will enter into a new form of exploitation, and one which is unmediated by any supposedly progressive principles.
This development also illustrates a shift in one of the things that makes UK landlordism so unusual. Unlike most major economies, where the rental market is dominated by large institutional players, the majority of the UK’s landlords are small-time individuals. There is some evidence of a rise in global corporate landlords in the UK, and John Lewis’s plan adds to that. For better or worse, we may increasingly see a housing market dominated by finance capital, rather than individual owners.
John Lewis is the sort of company that would probably never publicly support contentious policies like the Tories’ proposals for tearing up planning law, but it seems that they’re happy to quietly benefit from them. The government has recently relaxed restrictions on converting commercial property into residential, which is surely a boon to a retail company looking to develop ”sites in its existing property portfolio”. The decision from John Lewis, together with the government’s proposals, might also be showing us the direction of travel: a society in which housing is wrested from declining high streets and town centres.
The counterpoint to all of this is that it might actually not be telling us very much at all. Perhaps John Lewis’s move simply indicates a greater degree of frankness and transparency about companies’ involvement in land and property than we’re used to seeing. It’s not often pointed out that Sainsbury’s property portfolio is worth £10.1 billion. Homelessness charity St Mungo’s appears to derive far more income from its function as a landlord than from its fundraising activities. Rent extraction is at the heart of a great many businesses, and John Lewis’s decision to market itself as a residential landlord might be more of a cosmetic exercise than a genuine shift.
As some of the authors have previously argued (here and here), residential property is very much the UK’s key national industry. In that context it is unsurprising that its domestic capital seeks refuge in a sector that’s so heavily protected by the state. The UK looks after its landlords through a huge variety of legal, financial and structural measures and – as John Lewis muscles its way into the market – the quotes from Starmer and Johnson at the top of this article may contain more truth than they realise.
Let’s imagine for a moment that a post-millennial centrist is sent to Mars for a lengthy exile. If the Martians asked them to name something so typically British that it brings a tear to their eye, there’s a good chance (if they’ve momentarily forgotten about the 2012 Olympics) that they’d well up at the thought of the John Lewis Christmas adverts. Ask an exiled British leftist (or anyone under 35) the same question and they’d probably start griping about landlords, rent and the housing crisis. Perhaps it’s unsurprising that these two totems of British society – its weird ‘respectable’ capital and its unusually severe housing crisis – are going to start to look alike.
Nick, Joe, Lily and Isaac are writing on the housing question in the UK, their work appearing on this blog and elsewhere.
19 July 2021