Tesco plans to build homes on land purchased during expansion

Supermarket giant Tesco plans to build homes on land earmarked for new supermarket projects that have now been abandoned, The Scotsman reported.

The retailer plans to build 4,000 homes in the UK on landbanks it purchased during a period of rapid expansion.

The UK's biggest retailer last year came out with proposals to extensively cut back on new store openings in the face of mounting pressure from discount retailers such as Aldi and Lidl, as customers moved away from hypermarket shopping.

In response to customer habits, Tesco will cut the amount of new store space built each year, creating fewer large stores. Where no development plans, were available the company would sell sites, lease them or develop them for housing.

''We are currently working on plans for over 4,000 homes across the UK, either by building them ourselves or selling our sites to housing developers,'' said a Tesco spokesman. ''In places where we have already delivered housing schemes, the feedback from local communities and councils has been very positive.

''We are pleased to be bringing new investment to communities up and down the country and to be playing our part in meeting local housing needs over the coming years.''

Tesco's move could help ease the UK's chronic housing shortage, which was helping drive house price rises in some regions.

The initiative would also allow the firm to monetise some of its property assets.

According to data from mortgage lender Halifax, the UK's average house price was £183,462 in June.

Tesco with its £20-billion property portfolio, is yet to decide whether to sell the land to developers or build the homes itself, through its own developer Spenhill, Mailonline reported.

According to Philip Clarke, Tesco chief executive, he was facing the worst trading environment in his 40-year history.

Last month Tesco announced its worst results for 20 years, with sales down 3.8 per cent over the past three months.

Out-of-town supermarkets had seen declining as UK shoppers gave up their big weekly visits and turned to smaller convenience stores and online retailers.

Tesco therefore was slowing down its stores opening programme and revamping its existing hypermarkets by installing restaurants, coffee shops and bakeries.

The company said, "As we have previously announced, in response to changing customer shopping habits we have decided to reduce the amount of new store space we build each year, building fewer large stores.

"Where we no longer intend  to develop sites, we sell them,  lease them or develop them  for housing."