Lomond Quarterly Insights Autumn 2023

Lomond Quarterly Insight Property wisdom at work In conjunction with

Autumn 2023 Lomond Quarterly Insight | 1

Lomond Quarterly Insight

Content 1 Introduction Ed Phillips, Group Chief Executive

2 National sales Sensible pricing in the sales market Forecast growth | Recalibration | Steadier ground

4 National lettings Lettings market: rents continue to soar Gross yield | Growth continues | Affordability | Attractive student market

6 Scotland Record demand leads to record rents Sales | Lettings | The rental market | Sales market | First-time buyers

8 Yorkshire High demand and strong yields in the student rental market Sales | Lettings | Usual seasonal low | Investment opportunities

10 Manchester and the North West Rental opportunities Sales | Lettings | Active buyers | Setting expectations | Rental opportunities

12 Birmingham and West Midlands Cautiously optimistic Sales | Lettings | Sales stock squeeze | Longer lets | Landlord confidence

14 South Coast Robust in the face of headwinds Sales | Lettings | Market activity | Re-evaluating options

16 Lomond Investment Management Building momentum | Investor support | Attractive proposition | Market size and reach

20 Lomond property services Property wisdom to help businesses

Land and New Homes | Conveyancing | Investment Management | Mortgage Services

1,679 New lettings instructions over the last 3 months, up 94% on the previous 3 months.

Future-Proof Evolving landscape We welcome you to this third edition of the Lomond Quarterly Insight as we move into the final quarter of the year, providing valuable insights into the ever-changing UK housing market and looking ahead to 2024. With over £325m of property sales completed over the last three months, 22% higher than the previous three months, activity levels remain encouraging against a tough market backdrop. Inflation is stabilising and the economic outlook potentially improving. Property remains an excellent long-term investment and our team is here to help buyers, sellers and investors alike to navigate the complex landscape, and as the property market continues to evolve, we are actively embracing and leading this transformation.

Investing in our future As the fastest-growing network of lettings and estate agents in the UK, our recent lettings acquisitions of the Harvey Scott offices in the North West and Eve Brown in Scotland has solidified our status as the leading agent in the UK’s heartlands. The number of properties under our management nationally has surged beyond 40,000 properties.

Our investment in centralised technology infrastructure and support systems delivers unrivalled customer experience for both renters

£325m

Property sales over the last 3 months Lomond

and landlords alike and helps drive enhanced productivity. Our local experts across the regions provide the personal touch, leveraging their deep property knowledge and unmatched expertise, enabling us to be in the best position to seize the opportunities that lie ahead in an evolving lettings market.

We are a team of 1,100 people, the best talent pool in the sector and the key to delivering the success of our business. LOMONDlife is our employee engagement and reward portal, demonstrating our commitment to the wellbeing and support of our valued team, ensuring that we recruit and retain the best talent. Our new partnership with FranklinCovey is an investment in learning & development and the integration of world class leadership practices will further aid our people in their daily work and personal lives. We have also pledged to raise £25,000 for Centrepoint, our new nationwide charity partner, who support homeless young people and are campaigning to end youth homelessness by 2037.

Ed Phillips Group Chief Executive

“Our investment in people and technology underlines our ambitious growth plans to provide the solid foundations for the successful integration of upcoming acquisitions before the end of 2023 and into 2024.”

Lomond Quarterly Insight | 1

5,338 mortgage products on the market September 2023 vs October 2022 Moneyfacts, 2,258 post mini-budget

The number of mortgage products available is at its highest level since February 2022. This is 11% higher than September 2021 and more than double the availability in October 2022.

Sensible pricing in the sales market Forecast house price growth

Recalibration

A further softening of prices is likely to be seen during 2024, with a return to growth from 2025. Prices are forecast to increase in the medium term, by around 9% during the period 2026/2027.

Our buyer demand measure is holding up strong in spite of economic headwinds. We are up 28% on the same period last year, although slightly down on the previous quarter.

Motivated buyers are out there, however they are price sensitive, so pricing correctly from the onset is key.

Against a national backdrop of reduced transaction numbers, we had 1,170 exchanges across our network across the last quarter, up from the previous quarter and the same period last year. Buyers are active in our markets and are continuing to find an affordable middle ground.

Completions are high, and our supply pipeline is robust.

Average annual % change 0%

2%

4%

6%

0.2%

2025

2.9%

2026

5.6%

Dataloft, HM Treasury Consensus Forecast

Lomond Quarterly Insight | 2

2027

High borrowing costs and economic pressures have shaken buyer confidence in recent months, and with the traditional summer slowdown, subdued activity is unsurprising. We have seen no dramatic drop in prices; however a slight softening is occurring. The average house price is down 5.3% from the same time last year, but on a quarterly basis price falls are slowing1. As autumn gets underway demand is likely to build,

Despite challenging conditions, the market remains resilient, with a positive medium-term outlook for house prices. supported by the strong jobs market and lender flexibility. With a positive longerterm outlook, supported by the general lack of housing stock, the housing market is still a stable investment and it is a good time to be a buyer.

Steadier ground The economic picture is brightening; the bank rate is approaching its peak and inflation is falling. Interest rates are forecast to drop in 2024 and the UK economy is expected to avoid recession. Lenders are becoming more competitive, with lowering rates and flexible deals. The average five-year fixed rate has fallen below 6%, for the first time since early July2. Although the number of mortgage approvals is below the long-term average, it is a 14% improvement on the start of the year3.

As we enter a period of stability for mortgage holders, sentiment and activity should improve. ¹Nationwide, 2Moneyfacts, 3Bank of England

SALES Market confidence Jun 2023 - Aug 2023

Our data performs across our network

34 Instructions per branch

Jun 2023 – Aug 2023

33.8% fall through rate

38.0% withdrawal

35.0% One year ago

35.4% One year ago

Supply

34 Jun 2022 – Aug 2022

Dataloft, Lomond, ONS

213

Market balance

Applicants per branch

Jun 2023 – Aug 2023 Annual house price change

New applicants per new instruction 8

14%

7

12%

6

Demand

166 Jun 2022 – Aug 2022

10%

5

8% 6%

20

4%

Exchanges per branch

4 3 2 1

2%

0

0% Nov 2021

Feb 2022

May 2022

Aug 2022

Nov 2022

Feb 2023

May 2023

Aug 2023

Jun 2023 – Aug 2023

Activity

17 Jun 2022 – Aug 2022

Dataloft, Lomond, ONS

74

Market metrics Current at 1 Oct 2023

Valuations per branch

Mortgage approvals Aug 2023

45,354 -11.2%

Change since May 2023

87,010

Sales Aug 2023

Jun 2023 – Aug 2023

Supply pipeline

64 Jun 2022 – Aug 2022

+7.1%

Change since May 2023

-0.5%

Economy GDP growth Jul 2023

-0.5%

Change from year earlier

Average property price Jul 2023

£289,824

12

+1.7%

Change since May 2022

58,050

New homes built Q2 2023

Viewings per instruction

-13.5%

Change from Q2 2022

5.25%

Bank base rate Sept 2023

+0.75%

Change from May 2023 Dataloft, Bank of England, HMRC, ONS, DLUHC

Lomond Quarterly Insight | 3

Jun 2023 – Aug 2023

Buyer interest

11 Jun 2022 – Aug 2022

Average numbers per branch during time period specified

5 – 6% Average rent rise forecast in 2024 Zoopla

Annual rental growth is on track to end 2023 at over 9%, with 5-6% predicted for next year, the main drive originating from regional cities.

Lettings market: rents continue to soar Gross yield growth

Growth continues

Yields have increased across the board, with flats seeing the largest percentage point increases.

The rental market is extremely busy.

Average rents continue to soar, at £1,276 in September, up 10.1% year on year1. Renewals are up 80% on the previous quarter, as renters would rather stay put than brave the rent increases on the open market. We have seen a slight rise in stock but there are no signs of any substantial supply increase to meet demand, meaning the imbalance will persist into next year.

Gross Yield Growth 2021 to 2023, percentage points 0%

0.5%

1%

1.5%

2%

2.5%

3% Studio flat

1.74%

2.52%

2.37%

2.29%

0.43%

0.80%

0.35%

0.22%

Dataloft, DRMA, Land Registry

Lomond Quarterly Insight | 4

1 bed flat

2 bed flat

3 bed flat

4+ bed flat

2 bed house

3 bed house

4+ bed house

Although some landlords are leaving the sector due to increasing costs and compliance, there hasn’t been an exodus and some landlords always exit the market for personal and specific reasons. What is causing the supply shortage is the reduced flow of new landlords and buy-to-let properties. However, around 40% of landlords have no mortgage at all, and 30% are on a low loan-to-value, so are sheltered from higher interest rates2.

Affordability With rental growth outpacing earnings, renter affordability is being stretched. The average proportion of gross rent spent on new tenancies

Students are becoming increasingly discerning and it is essential that properties are both aesthetically attractive and well maintained. across the UK is 26.8%3,4. Rental price growth in the near term is likely to be determined by affordability and how renters adjust to higher rents.

Increasingly unaffordable rents should reduce demand, driving renters to consider smaller homes, moving to less expensive areas or sharing with other renters, slowing the pace of rental growth.

Attractive student market Demand in our student market is supported by a huge undersupply, and there are significant opportunities to invest. There is currently a shortfall of 207,000 student beds, set to worsen with a predicted deficit of around 450,000 by 20255. Yields across our network for student accommodation are typically higher than in the private rented sector, reaching an average 8.4% for a three-bed flat and higher for one-beds and studios. ¹HomeLet, 2Zoopla 3Dataloft, 4ONS, 5StuRents

LETTINGS Renter affordability

Our data performs across our network

27 Instructions per branch

Jun 2023 – Aug 2023

33.5% net

31.2% net

Jun – Aug 2023

Jun – Aug 2018

Supply

18 Jun 2022 – Aug 2022

Dataloft Rental Market Analytics, showing median % renter incomes spent on rent after tax

428

Rental price dynamics

Applicants per branch

Jun 2023 – Aug 2023 Annual change in UK rents

Demand

12%

398* Jun 2022 – Aug 2022

10% 8% 6%

84

4%

Tenancies agreed per branch

Jun 2023 – Aug 2023

2% 0% May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023

Activity

130 Jun 2022 – Aug 2022

Dataloft, Lomond, HomeLet

16

Market metrics Current at 1 Oct 2023 Earnings growth rate May to Jul 2023

+2.6%

Change from year earlier

Average rents annual change Aug 2023

£1,261

Change from year earlier

+10.3%

Unemployment rate May to Jul 2023

4.3%

Change from year earlier

+0.7%

Inflation current annual rate of change Aug 2023

6.7%

Jun 2023 – Aug 2023

Supply/ demand balance

Renter affordability Jun – Aug 2023

26.8%

BTR pipeline under construction + planning

165,302 +11.7%

Jun 2022 – Aug 2022

Viewings per new instruction

+0.2%

Change from year earlier

25*

21

-3.2%

Change from year earlier

Change from year earlier

Applicants per instruction

7.8%

Jun 2023 – Aug 2023

Competition

36 Jun 2022 – Aug 2022

Dataloft, Lomond, ONS, HomeLet, BPF

Lomond Quarterly Insight | 5

Average numbers per branch during time period specified *Excludes Yorkshire

Scotland Operating the largest lettings agency in Scotland, our branch network covers the strategic locations of Edinburgh, Glasgow, St Andrews and Aberdeen.

SALES

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

25

259 Lower

Higher

Lower

+2

David Alexander Regional CEO

“Demand in the rental market is vastly outstripping supply. With around 40,000 people looking to view one hundred of our flats in July, properties are moving very quickly.”

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

14

10 Lower

Higher

Lower

+3

LETTINGS

Higher -2

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

50

186 Lower

Higher

Lower

+5

Higher +2

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

195

4 Lower

Higher +1

Lomond Quarterly Insight | 6

Higher -1

Lower

Higher -2

9

Acquisitions in the past two years Scotland

Record demand leads to record rents The rental market Rents continue to rise rapidly, with Scotland experiencing the highest annual rental growth of all the UK regions1. A critical element of this is rent control, introduced in Scotland in September 2022, which caps increases for existing tenancies at 3% a year. When properties become vacant landlords may reset rent to full market rate. This has fuelled record rental growth as landlords maximise rents for new tenancies to cover higher costs and allow for rent increases being capped throughout the tenancy.

There is a gap in the market where landlords have left the sector due to increased regulation and taxation.

Significant gains can be made by those with a longer-term view, with capital appreciation and strong rental growth. Student properties in Glasgow, Edinburgh, and St Andrews are in high demand. Rents have seen a substantial increase, climbing from a historical average of £300 per room to £500 – £600.

Sales market In the sales market, there has been a slight softening in prices and demand, but no major drop. Realistic pricing is ¹Zoopla, 2Nationwide

important, and we have been advising sellers who are listing too high to adjust prices slightly; the property they are about to purchase is also likely to be priced lower than a year ago.

Properties are taking slightly longer to sell with the average period rising by around two weeks. Location remains key, and well-presented properties in the right area at the right place will have no problem selling. Although inflation is coming down, market conditions will remain challenging into 2024, with no significant price rises or falls anticipated.

Scotland had the highest annual rental growth of all UK regions Scotland

12.7% Glasgow

13.7% Dataloft, Zoopla

Edinburgh & Dundee

15.6%

Affordability of first-time buyer mortgages

23.6% UK

Scotland

39.0%

First-time buyer mortgage payments as a % of take-home pay Dataloft, Nationwide

First-time buyers Extremely price sensitive, the first-time buyer market is not quite as buoyant as it once was due to high interest rates and costs of living. There is, however, still a market out there, people just need to realign what they can afford, with Scotland one of the more affordable markets for first-time buyers. Lenders are flexible and mortgage rates are starting to come down, improving affordability and increasing confidence in the first-time buyer market.

Lomond Quarterly Insight | 7

Yorkshire From The Pennines to the east coast, The Dales to The Peaks, our branches span the breadth and depth of Yorkshire.

SALES

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

29

165 Lower

Higher

Lower

-1

Martin Elliott Regional CEO

“Although it is certainly a buyer’s market, prices are for the most part realistic, with a general alignment between buyer and seller expectations.”

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

15

6 Lower

Higher

Lower

+1

LETTINGS

Higher -1

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

24

372 Lower

Higher

Lower

+5

Higher +3

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

81

16 Lower

Higher +1

Lomond Quarterly Insight | 8

Higher -2

Lower

Higher +5

£100.5m

£

Value of properties sold in the last 3 months Yorkshire

High demand and strong yields in the student rental market Usual seasonal low Demand is starting to bounce back as we move into autumn, following the usual seasonal summer downturn, although there is still some hesitancy in the market. However, it is not the market the media makes it out to be.

Instructions and asking prices remain high, exchanges are on target and people still want to invest. Buyers who are reliant on mortgages are particularly cautious and fall through levels are slightly higher than usual.

However, the market is strong for cash buyers or those on a low loan-to-value.

With expectations that interest rates will soon come down, some buyers are holding off, but for others there is an acceptance that mortgage rates are back to where they were a few years ago. They are going ahead with the move with the view that if mortgage rates improve then it will make things easier down the line.

Our Sinclair student brand manages around 330 properties and 1,300 student clients, approximately half of the York student market. We enjoy a stable landlord base, and operate a slick process, having been in the market for a decade. Demand is high,

with the student market overspilling to areas outside the main student area, where lower purchase prices make good yields achievable. Three to six-bed houses typically provide the best returns, however there is a rise in landlords buying two-bed flats due to fewer planning restrictions. Planning restrictions on new build property in the area mean that the student market will continue to be undersupplied, and high rents in the city centre provide an

excellent investment opportunity.

Location is critical, as it dictates demand and rent, and we would advise our landlords to refurbish the property to a high standard within any void period, as tenants will typically look after a high quality property. In the rest of the rental market, demand is slightly down, however rents are steady and rising, with stock levels at an all-time high.

Strong rental growth in our area supports good yields.

Although we have seen some landlords selling up in areas such as Hull, Wakefield and Pudsey, investment levels in other area remain strong, with high yields available, supported by strong rental growth.

People with money are still looking to invest in the property market and will be supported by our new team helping investors to focus on the right places to generate the best returns.

Average rental growth

27%

30%

25%

20%

13%

15%

10%

7%

Attractive yields

7.5-8%

5%

0%

1 year

Investment opportunities

2 year

Dataloft Rental Market Analytics best-fit local authorities, Land Registry

5 year

typical current yields for student lets

Dataloft Rental Market Analytics, Land Registry

Lomond Quarterly Insight | 9

Manchester and the North West Covering Manchester, Stockport and Chester, our local experts have an unrivalled depth of knowledge in key strategic locations.

SALES

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

48

334 Lower

Higher

Lower

+1

Jason Watkin Regional CEO

“With interest rates soon to peak, buyer confidence and sentiment should improve as we come into autumn and enter a period of greater stability.”

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

33

7 Lower

Higher

Lower

+3

LETTINGS

Higher -1

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

22

553 Lower

Higher

Lower

+5

Higher +3

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

65

26 Lower

Higher -1

Lomond Quarterly Insight | 10

Higher -1

Lower

Higher -1

6,735

Number of properties under management Manchester and the North West

Rental opportunities Active buyers The slight slowdown in our sales market should settle as buyers adjust to higher interest rates and the expected fall in mortgage rates starts to filter through. Although prices have softened somewhat, there have been no significant slides or real drops in activity and the rate of sales being agreed is holding up. With a constant flow of people relocating to this area, there is a market out there for switched-on buyers. Stock levels are higher than they have been in some time, providing choice for the healthy intake of buyers who have been registering. Conversion rates have also improved, indicating there are more genuine, committed vendors and sellers in our market. Our first-time buyer market has been very active, showing a keen desire to get a footing on the property ladder but they are having to evaluate what they can afford and possibly compromise.

Setting expectations In a price sensitive environment, managing vendor expectations with expertise and experience is key.

Higher interest rates have meant a substantial shift in buying power and ¹ CBRE

Tenancy renewal

76%

of agents have seen an increase in renters looking to renew tenancies Dataloft Inform Poll of Subscribers.

buyers are hesitant to overstretch themselves. Around a third of properties now sell in 30 days, down from 50% twelve months ago, as buyers take time to consider their decision. Although a gap in expectations between buyers and sellers is prevalent, we are seeing sensibly priced properties receiving multiple viewings and going for above asking price.

as renters fear the open market.

Our student market is one of the most undersupplied in the UK, witnessing a shortage of 23,186 beds1. An increase in renewals has further constricted supply and supported significant rent rises.

There is an increasing institutional appetite and investment in the sector, with significant opportunities for both institutional and private landlords.

With the prevailing issue of lack of stock, we are extending our reach, letting new development properties in Preston, Liverpool and Stoke-OnTrent, giving our landlords a wider range of opportunities and returns on investment.

Lack of student beds

23,186 shortage

Rental opportunities Rents are continuing to rise, not yet limited by the affordability ceiling and supported by our region’s economic diversity, high employment and large-scale investment. We have a high percentage of tenancy renewals

in the North West Dataloft, CBRE

Lomond Quarterly Insight | 11

Birmingham and West Midlands Our heart of England branches cover Birmingham, and from Cannock down to picturesque villages on the Cotswolds border.

SALES

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

16

115 Lower

Higher

Lower

-1

Richard Crathorne Regional CEO

“Outwardly looking and adaptable, our team is here to assist and advise.

We are adding new services that suit the ever-changing market.”

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

7

7 Lower

Higher

Lower

+3

LETTINGS

Higher +1

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

34

406 Lower

Higher

Lower

+3

Higher +1

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

67

12 Lower

Higher +1

Lomond Quarterly Insight | 12

Higher -1

Lower

Higher -2

6

Number of branches Birmingham and West Midlands

Cautiously optimistic

Longer lets We have seen lower levels of churn in our rental market, with fewer checkouts over the last quarter. People are renting for longer and Birmingham, a vibrant city with easy access to rural areas, is a good place for renters to settle. Rents are still being pushed up

Rental growth

Energy conscious

2 out of 3

buyers are interested in the EPC rating of a property Dataloft Inform Poll of Subscribers

+31%

Activity levels have been resilient; sales agreed were slightly down in August but this is expected during the summer holiday period. Price adjustments have been high on the agenda as vendors expectations are adjusted. Our main challenge is stock, with fewer properties coming to the market. On the plus side, this has shielded us from any significant price falls. A lack of good quality stock for downsizers, such as small build redevelopments, is preventing major stock release. Despite the seasonal slowdown, the market has not lost momentum; our applicant registration is very strong and all signs are pointing to us entering a busier market.

Mortgage rates are heading in the right direction, and people are accepting current rates as the norm and building them into their affordability. There are active buyers in all areas of the market for good quality, correctly priced properties.

Having experienced less price growth than other property types, studio and 1-beds are relatively more affordable, and increasingly popular with couples.

+22%

Sales stock squeeze

Studio and 1-bed flats

All other properties

Dataloft, DRMA, 5 year growth in Lomond Birmingham area

and demand is strong, with rents typically rising from 10-15% on any relet and 5-10% on renewal. We haven’t seen any spike in renters falling into arrears. This has remained steady, partly driven by the choice and quality of the properties we manage, spread between the city centre, rural and suburban markets. People are generally adjusting their lifestyles in the face of higher rents, prioritising the roof over their head and changing their spending habits. Increasing numbers

of couples are considering renting smaller properties, attracted by reduced bills and council tax, and these are letting very quickly. Renters and buyers alike are taking energy efficiency into consideration, as they build bills into affordability calculations.

Landlord confidence Although we have seen an increase into enquiries from landlords about their properties’ worth, we have not seen any dramatic landlord exodus.

However, the introduction of Selective Licensing in Birmingham, which requires landlords to obtain a license as a prerequisite to letting out a property, has knocked landlord confidence, seeing it as another reduction to return on investment.

Lomond Quarterly Insight | 13

South Coast Reaching from Chichester to Camber, our network of south coast branches are market leaders for sales and lettings.

SALES

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

44

204 Lower

Higher

Lower

-2

Paul Broomham Regional CEO

“With interest and mortgage rates stablising, we are entering a market where people know where they stand and are less likely to have to overstretch.”

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

29

5 Lower

Higher

Lower

+1

LETTINGS

Higher +1

compared to same period a year earlier

Supply

Demand

New instructions per branch

Applicants per branch

24

481 Lower

Higher

Lower

+5

Higher +1

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

69

20 Lower

Higher +2

Lomond Quarterly Insight | 14

Higher -2

Lower

Higher -3

137 Number of Employees South Coast

Robust in the face of headwinds Market activity As economic uncertainty eases, we are seeing an increase in people dipping their toe into the water and getting market appraisals. There is still activity and properties are moving but tends to be needs-based moves that are fuelling the market. We are seeing an increase in cash buyers, who generally are looking for larger discounts, although buyers and sellers are typically well aligned.

Sellers are increasingly aware that buyers are price sensitive, and the best performing properties are the ones priced right from day one.

Longer lets In an ever-evolving market, we have seen a move from short-term holiday rentals back to longer-term lets. With the world open once more, demand for short term lets in Brighton has softened and landlords are looking to gain a more stable and consistent income, often in the student market.

Average revenue for short-term lets in Brighton and Hove was down 4% over the last year, and the average occupancy rate 3% lower in the same period (AirDNA). For those remaining in the sector there are gains to be made, but in a hypercompetitive market the property must be well presented.

4+ bed houses are in demand, while smaller flat sizes are preferred by international students.

Properties let to students 35%

30%

25%

1 bed flat 2 bed flat 2 bed house 3 bed flat 3 bed house 4+ bed flat 4+ bed house Studio flat

20%

54%

of renters would be interested in a utilites package (gas, water, electricity) Dataloft, Property Academy Renter Survey 2022

15%

10%

5%

0% DRMA, Brighton and Hove, and Worthing, profile of properties let to students over last year

Re-evaluating options Properties in our rental market continue to be let very quickly.

Although rental values are growing, the rate of growth is starting to soften, as rents are reaching the affordability ceiling for those who have hard budgets and are willing to wait longer for a suitable property within budget.

We have seen a recent increase in churn, marginally increasing supply, as renters are revaluating if their

current let is too indulgent in today’s market.

Accommodation is massively undersupplied for Brighton’s student population of nearly 50,000 students and growing. Although 4 and 5-bedroom HMOs are the most common, there is a growing market for 1 and 2-bedroom flats, popular with international students. Rents in our student market have increased by 16% since the start of the 2021 academic year. Strong yields are there for well-presented properties. There has been an increasing appetite for bills-inclusive, and committed fixed packages, safeguarding the concern of more money being asked for if fuel prices rise, a trend we expect to see continue.

Lomond Quarterly Insight | 15

28,000 Single-family rental homes in the UK British Property Federation (BPF), as at end Q2 2023 (includes units built, under construction and in pipeline)

Lomond Investment Management Building momentum

Lucy Jones Chief Operating Officer

“For investors, the single-family element of Build to Rent (BTR) combines stability and growth with predictable cash flows, reduced vacancy risks, and impressive yield potential. Lomond Investment Management provides bespoke services in this growing sector including asset plans, mobilisation, leasing and management.”

Lomond Quarterly Insight | 16

The Build to Rent (BTR) sector across the UK is gaining popularity with over 253,000 homes built, under construction or in the planning pipeline (British Property Federation), an increase of 12% in the last year. Growth in the sector to date has largely been through the development of apartments (multi-family accommodation) offering high quality, professionally-managed homes with a host of amenities including gyms and wellbeing suites, workspaces and concierges.

Almost 60% of renting households across Great Britain live in houses and momentum is now building in the development of houses for rental, known as single-family housing. With less focus on amenity, homes are still professionally managed and built to a high standard, often in suburban areas, providing a community focussed and family-friendly environment. Still a relatively small part of the market–just 12% of the existing and future BTR pipeline are single-family houses–the sector is increasingly appealing to investors. It offers opportunities for wealth creation and caters to

56% of privately renting households across Great Britain live in houses Census, ONS, National Records of Scotland

evolving housing needs, while redefining portfolios, driving innovation and securing future success for professional landlords and investors.

Investor support The whole BTR sector, but especially the single-family segment, is attractive to institutional investors due to its predictable cash flow, lower vacancy risks, and robust yield potential.

The experienced Lomond Investment Management (LIM) team provides advice on all aspects of the acquisition, investment, leasing and management process. Through geographical spread of single-family housing we can help investors build a diversified portfolio, reducing exposure to regional economic shifts.

9,187

Single-family homes in the pipeline

British Property Federation (BPF)

The stable cash flow, potential for appreciation, and lower maintenance costs over time make single-family homes an attractive and sustainable option for investors seeking stable returns for a longer duration.

Single-family housing Lomond’s reach

Attractive proposition

Single family housing units across Lomond’s core regions

Single-family homes have a number of benefits for investors: 6,000

5,000

4,000

3,000

2,000

1,000

South Coast

Scotland

Birmingham and W Mids

Yorkshire

Manchester and NW

0

British Property Federation, as at end Q2 2023 (includes units built, under construction and in pipeline across Lomond areas of operation)

Lower turnover rates and reduced vacancy risk: Single-family homes are attractive to families, young professionals and those seeking a suburban lifestyle and greater security of tenure while renting. Compared to apartments, they offer more privacy, space, and control. Families tend to stay longer and present investors with a stable and predictable income stream.

Construction costs are often lower than larger multi-family developments: This makes it easier for investors to enter the BTR market and build a portfolio of properties, ultimately leading to faster scalability.

Higher value appreciation potential: Single-family homes compared to multi-family properties.

Less competition: Institutional BTR investors tend to focus on multi-family developments.

Market size and reach The current pipeline of single-family rental houses across the UK is 28,000

Lomond Investment Management is well-placed to serve the single-family BTR market: with UK wide coverage, our clients have a dedicated team looking after their portfolio, however diverse or widespread the geographical location.

(BPF). This includes 9,626 (34.5%) complete and operational, 9,122 (32.7%) under construction and 9,187 (32.9%) in the planning pipeline. The stock of properties under Lomond Investment Management continues to grow Within the vicinity of the UK’s major regional cities, Manchester, Birmingham, Leeds, and Glasgow, we are seeing strong demand for single-family BTR homes. These cities are attracting growing numbers of people and businesses, and there is the demand for more high-quality rental accommodation. Single-family housing developments often provide good accessibility to jobs, schools, and amenities while appealing to the increasing popularity of flexible working arrangements, and the desire of more people to live in a community setting.

Lomond Quarterly Insight | 17

DEMOGRAPHICS OF RENTERS Age profile

Household profile of renters

Renters of flats in urban areas (more typical of multi-family BTR apartments) tend to be younger than renters of houses in suburban areas (representative of the single-family housing product). The latter caters for ages across the spectrum.

While families are much more likely to be renting suburban houses than urban flats this accommodation also caters for other household types. Two fifths of renters of suburban houses are couples or sharers and one in eight are living alone.

60%

60%

50%

50%

40%

40%

30%

30%

20%

20%

10%

10% 0%

0% Up to 19

20-29

30-39

Urban flats

40-49

50-59

60+

Couple/Sharer

Suburban houses

Urban flats

Families

Single

Suburban houses

Dataloft Rental Market Analytics, based on the tenant demographic profile of renters living in different accommodation types in the private rented sector across Great Britain

Profile of renters in suburban houses

46% families

53% aged 30-49

40% moved less than 2 miles

Dataloft Rental Market Analytics, based on renters across the private rented sector living in suburban houses.

Lomond Quarterly Insight | 18

18%

moved more than 25 miles

Lomond Investment Management A BESPOKE SERVICE Our bespoke, innovative solutions are designed to maximise return and mitigate risk for investors seeking a trusted partner to manage the specialist processes of marketing and managing all aspects of their property portfolios.

We truly understand the complexities and unique requirements of all aspects of portfolio and asset management.

Managed developments The Shackles •

Sale of freehold investment of whole development

•

25 apartments

Marketing and lease up • • • • •

Development and Scheme pricing Strategic approach to maximise occupancy whilst maintaining headline rents Letting team available to work on and off site Design, consultancy and furnishing solutions Tenancy administration and move in services

Annington •

Build to Rent

•

207 units

Management • • • • • • • •

Mobilisation Operational management strategy Combined building and apartment management Reactive and longer-term maintenance plans Block and Estates services Health and Safety and statutory compliance Budget preparation and management Refurbishment and consultancy services

We offer national coverage, centrally managed with a dedicated team, tailored service and integrated platforms.

Contact: lim@lomond.group

Lucy Jones Chief Operating Officer

Nick O’Reilly Director of Property Management

Services: • • •

Onsite leasing and management team Technical management of building >18 metres Estates and apartment management

Citra •

Single Family Housing

•

604 units throughout the UK Services: • • •

Asset plans Mobilisation and leasing Management

Melany Roake Head of Operations

Kenny Ord Operations Manager

Lomond Quarterly Insight | 19

Lomond property services

Land and New Homes

Conveyancing

Investment Management

Lomond Mortgages

Offering a full range of consultancy and sales and marketing services to landowners, developers and individual investors. Including research and viability reports, land consultancy and sourcing, through to turn-key marketing for land disposal, acquisitions and developments. For residential house builders and developers, our extensive database, bespoke marketing programmes, and enviable track record going back over 25 years, have seen our Land and New Homes teams appointed sales agents on many prestigious development properties throughout the UK.

Working with a trusted panel of solicitors and conveyancers in your area, we speed up the moving process by up to 4 weeks. Offering end-to-end digital onboarding, Compliance, Legal Preparation, Conveyancing and Surveys.

Our online portal houses all important documents and provides complete visibility to all parties, tracking the progress of conveyancing in real time.

A fully regulated service, providing clear, independent and professional advice.

Providing an account-managed single point of contact service for lettings, management, block & estates management and sales throughout the UK, irrespective of portfolio size and geographical location. We work with both Build To Rent and Single-Family Housing clients as well as Institutional and Individual Investors. Our bespoke, innovative solutions maximise return and mitigate risk for investors seeking a trusted partner to manage the specialist processes of marketing and managing all aspects of their property portfolios.

From online, digital services to in-branch brokers, we access the whole of the mortgage market with our specialists’ brokers. With expertise in mortgages for first time buyer, homemovers, and remortgages, as well as buy to let mortgages for the one off investor or career portfolio landlord, we provide fully independent advice and access to all major lenders.

Ed Phillips Group Chief Executive

Lomond Quarterly Insight | 20

Lucy Jones Chief Operating Officer

Ian Sutherland Chief Financial Officer

Our Lomond network We have an established network of high quality regional sales and lettings agents across Scotland, Yorkshire, Manchester, Birmingham, Brighton and Exeter. With integrity, technology and innovation at our core, our brands are market leaders, with a competitive advantage over the strongest independents and the largest corporate and franchise agencies in the industry.

Our ambition is to continue acquiring and transforming local agents across the UK, expanding existing regions and venturing into new areas.

Head Office 70 St Mary Axe, London,EC3A 8BE Regional Offices 3rd Floor, The Senate, Southernhay Gardens, Exeter EX1 1UG Richmond House, Lawnswood Business Park, Leeds LS16 6QY Contact info@lomond.group

IN ASSOCIATION WITH DJ ALEXANDER

The UK’s leading network of Sales & Lettings agents

In conjunction with

dataloft.co.uk

Dataloft provides data-driven analytics and insights on housing markets as part of PriceHubble, a global data and technology and business. Our team of analysts and data scientists produce the evidence needed by clients for marketing strategies, investment decisions and planning submissions.

lomond.group

Disclaimer: This report is produced for general information only. While every effort has been made to ensure the accuracy of this publication, Dataloft Ltd accepts no liability for any loss or damage of any nature arising from its use. At all times the content remains the property of Dataloft Ltd under copyright, and reproduction of all or part of it in any form is prohibited without written permission from Dataloft Ltd. Date of publication: October 2023 Analysis, editorial, design, graphics and charts by Dataloft.

Property wisdom at work In conjunction with

dataloft.co.uk Lomond Quarterly Insight | 22