LQI January 2024

Lomond Quarterly Insight Property wisdom at work In conjunction with

Winter 2023/24 Lomond Quarterly Insight | 1

Lomond Quarterly Insight

Content

50 acquisitions in the last three years Equivalent to one deal every three weeks as we expand our footprint

Introduction Ed Phillips, Group Chief Executive

National sales Market momentum Opportunities in 2024 | Beating expectations | Buyer impetus

National lettings Busy year ahead

Optimism

Opportunities in 2024 | Continued growth | Market appetite | Professionalisation

As we welcome you to the fourth edition of our Lomond Quarterly Insight, we are thrilled to be starting 2024 on a high note. We had another great year, growing our presence, defying expectations and showcasing the strength of our team. Against a national backdrop of subdued sales demand, we recorded a 10% uplift in applicants per branch and a 31% increase in new applicants per sales instruction in 2023. We are cautiously optimistic about the year ahead. An improving economic landscape, combined with mortgage rate cuts, should translate into a more active sales market and we expect rental growth to remain robust, as demand continues to outpace supply.

Scotland Exceeding expectations Propelling forward | Outperformance | One-stop shop

Yorkshire Growing stability Increasing confidence | Rental market | Regulations

Manchester and the North West Looking forward Opportunities for 2024 | Improving efficiencies | Outlook

Birmingham and West Midlands Changing with the times Expansion | Robust market | Professionalisation

South Coast Market in motion Buyers return | Up to standard | Student market

Lomond Investment Management Single-family housing | Tenant priorities

Lomond property services Property wisdom to help businesses

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

Lomond Quarterly Insight | 2

Poised for success

Growth journey Reaching the milestone of fifty acquisitions in just three years, equating to a deal every three weeks, means we have significant growth momentum, reinforcing our position as a dynamic force in the UK property industry. Last year, we grew our lettings portfolio to around 43,000, spreading into new territories and deepening our local expertise. Our recent acquisition of Beals more than doubled our footprint along the South Coast

Over £20,000 raised for Centrepoint charity in first 6 months

and we reached a major milestone in the North West, tripling the portfolio since launch. We also expanded in the Midlands and across Scotland, unifying our brand.

Great Place To Work® People are at the core of this business.

We have expanded the first-class team which underpins all our successes and are proud to be certified as a ‘Great Place to Work’. This recognizes our work in building a supportive and engaging workplace that values our employees and promotes development.

We also came together from across the UK to support Centrepoint’s Sleep Out Event. Our nationwide charity partner helps young homeless people throughout the UK and we are delighted to have raised over £20,000 in the first six months. All in all, I am immensely proud to lead this dynamic, talented and caring team into the next stage of Lomond’s growth journey.

Ed Phillips Group Chief Executive

“We are raring to go as we enter 2024, poised for an accelerated growth journey, and will continue to invest in leading technology to drive efficiencies and match people with property.”

Lomond Quarterly Insight | 1

SALES

£1.09bn

With over £1bn of sales in 2023, our network has shown unwavering resilience against a challenging backdrop.

Total value of residential sales in 2023 Lomond

Market confidence 2023

Our data performs across our network

101 Instructions per branch

2023

Market momentum

33.1% fall through rate

42.2% withdrawal

35.1% 2022

39.0% 2022

Supply

120 2022

Lomond, Dataloft, ONS

Falling mortgage rates Since a peak in summer 2023, average mortgage rates have been on a downwards trajectory.

Product choice has been rising, reaching a 15-year high in January (Moneyfacts).

We surveyed our regional CEOs to get a nationwide insight into key themes for 2024:

Average mortgage rates

1.

2-year fixed

5-year fixed

6.5

Falling inflation and mortgage rates will stimulate the market

2. Shift to more aspirational purchases

6.0

3. Increasing consideration of auction for speed and security of sale

5.5

5.0

697

Market balance

Applicants per branch

2023 Annual house price change

New applicants per new instruction 9

10%

8

6

4

01 Jul 2023

01 Aug 2023

01 Sep 2023

01 Oct 2024

01 Nov 2023

01 Dec 2023

Dataloft, Bank of England, monthly interest rate, (75% LTV) fixed-rate mortgages, not seasonally adjusted

Beating expectations The 2023 housing market surpassed expectations in the face of the dual challenges of high inflation and interest rate rises, seeing a slight softening in prices of -2.1% (UK HPI). Lomond delivered an exceptional performance this year. Viewings per branch were up 28% in 2023 compared to the previous year, and applicants and exchanges per branch were also up year-on-year.

With inflation reaching 4.0% in December and interest rates widely expected to come down in the second half of this year, mortgage rates are falling steadily, improving affordability.

Lomond Quarterly Insight | 2

Five-year fixed-rate deals are now being found for less than 4%, increasing confidence that we are entering a calmer period. Mortgage approvals, an indicator of future demand, recently reached their highest levels since July of last year, up 9.9% on an annual basis (Bank of England).

Buyer impetus Prices remain well above prepandemic levels, an average of £52,854 above 2019 (UK HPI). A forecast slight softening in prices of 1.1%1 offers opportunities for first-time 1

For buyers upsizing, any price moderation is relative, and a discount may be secured on the purchase of another property. A buyer moving from a £300,000 to a £500,000 home in 2023 would have benefitted from a softening in prices to the tune of £4,2002. This may be enough to encourage upsizers, who are likely to constitute a third of the market this year3, to move sooner rather than later. Forecast price growth of 17.2% between 2025 and 2028 4 will provide further impetus.

HM Treasury (independent average), 2 Dataloft, Assuming price moderation of –2.1%, UK HPI (year to November 2023), Zoopla, 4Consensus forecast

3

4%

68

2%

Exchanges per branch

2023

0%

1

buyers and movers. A more settled economic environment, rising optimism (the GfK Consumer Confidence Tracker having risen 20 points on an annual basis) and falling mortgage rates are likely to entice first-time buyers.

This sector is predicted to account for 40% of all home moves in 2024.

2022

6%

5

2

4.0

633

8%

7

3

4.5

Demand

0

-2% Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Activity

64 2022

Lomond, Dataloft, ONS

268

Market metrics Current as at 17th January 2024

Valuations per branch

Mortgage approvals Nov 2023

50,067 +24.5%

Change since Dec 2022

80,780

Sales Nov 2023 Change since Dec 2022

-17.8%

Economy GDP growth Nov 2023

0.3%

Average property price Nov 2023 New homes built Q4 2023 Change from Q4 2022

Bank base rate Dec 2023 Change from Dec 2022

Supply pipeline

222 2022

+0.2%

Change from year earlier

Change since Dec 2022

2023

£284,950

13

-1.4%

62,688

Viewings per instruction

-8.7%

5.25% +1.75%

Bank of England, HMRC, ONS, DLUHC

Lomond Quarterly Insight | 3

2023

Buyer interest

9 2022

Average numbers per branch during time period specified

32%

Of buy-to-let landlords intend to extend their portfolio in the next year

There are significant opportunities for investors to buy while the market moderates, with forecasts for capital growth, strong rental growth and improving yields.

LETTINGS Renter affordability

Our data performs across our network

109

Landbay

Instructions per branch

2023

Busy year for lettings ahead Rental price growth

Continued growth

Strong rental growth is forecast for the next few years, with 19.7% cumulative growth to 2028.

2023 was an extremely busy year for our lettings teams, who have seen a 5.8% increase in the number of properties under our management.

Rental growth was strong, growing by 8% (Dataloft, HomeLet year to December 2023). Demand is running 32% above the five-year average, supported by the supply demand imbalance (Zoopla/ Hometrack).

Competition is fierce; we had 14% more viewings per branch in 2023 than 2022 and 57% more viewings per new instruction in the same period. Rental price growth is forecast to continue, 19.7% cumulative growth is expected by 20281, averaging 3.6% per annum over the next five years.

2024

2023

5.2% 2025

2024

3.6% 2026

2025

3.3% 2027

Market appetite 2026

3.1% 2028

3.0% Dataloft Consensus of forecasts

Lomond Quarterly Insight | 4

2027

We are seeing a professional institutional type of landlord coming to us, encouraged by an increase in tenant demand and a softening in house prices. Almost a third (32%) of existing buy-to-let landlords intend to buy more property in the next year.

The majority of these are portfolio landlords, 44% owning eleven or more properties. Smaller landlords are also looking to grow, with 30% of those currently with one to three properties hoping to expand (Landbay).

1

We surveyed our regional CEOs to get a nationwide insight into key themes for 2024: 1.

Strong rental growth with long-term price growth

2. Landlords seeking professional management to maximise investment 3. Growth in student HMOs 4. Growing Build to Rent sector 5. Technology used to improve efficiencies for landlords and renters

33.4% net

31.2% net

2023

2018

Bricks and mortar remain one of the most robust long-term investments, and a good quality property in the right area will provide income as well as capital appreciation. Lenders are competing for the buy-to-let market, and the significant mortgage cuts seen over the past few months are likely to continue, helping improve margins for investors. Reduced rates for buy-to-let borrowers are increasingly available, including a two-year fixed-rate deal at 3.69% with The Mortgage Works2. 2024 is set to be a busy year for investors, with increasing regulation, the Renters (Reform) Bill and the upcoming general election. Getting support from an experienced team is key to navigating this ever-changing sector.

Dataloft Consensus of forecasts, 2The Mortgage Works, based on 35% deposit, as at 17/01/2024, T&Cs apply.

150 2022

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

832

Rental price dynamics

Applicants per branch

2023 Annual change in UK rents

Demand

12%

1227* 2022

10% 8% 6%

313

4%

Tenancies agreed per branch

2023

2% 0% Q2 2020

Professionalisation of the sector

Supply

Q1 2021

Q4 2021

Q3 2022

Q2 2023

Activity

344 2022

Lomond, HomeLet

8

Market metrics Current as at 17th January 2024 Earnings growth rate Sep 2023 - Nov 2023

6.6% +0.2%

Change from year earlier

Average rents annual change Dec 2023

£1,268

Change from year earlier

+8.0%

Unemployment rate May 2023 – Jul 2023

4.3%

Change from year earlier

+0.7%

Inflation current annual rate of change Dec 2023

4.0%

2023

Supply/ demand balance

Renter affordability Oct 2023 - Dec 2023

27.3%

BTR pipeline under construction + planning

171,554 +10.8%

2022

Viewings per new instruction

+0.6%

Change from year earlier

12*

16

-6.5%

Change from year earlier

Change from year earlier

Applicants per instruction

2023

Competition

10 2022

Lomond, Dataloft, ONS, HomeLet, BPF

Lomond Quarterly Insight | 5

Average numbers per branch during time period specified *Excludes Yorkshire

£81.3m

Scotland

Value of properties sold in the last 12 months

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

Scotland

SALES Supply

Demand

New instructions per branch

Applicants per branch

43

955 Higher

Lower

-2

“We aim to surpass client expectations in service levels, striving to be the best. With a focus on delivering excellence, our staff are the key to our success.”

Higher

Supply/demand

Exchanges per branch

Applicants per instruction

42

22 Lower

Higher

Lower

+3

LETTINGS

Higher +5

Demand

New instructions per branch

Applicants per branch

191

586 Higher

Lower

-1

Higher

One-stop shop

Positive growth

Annual house price growth Scotland

+2.2% UK average

-2.1%

England average

-2.9%

UK HPI November 2023

Outperformance We are off to a good start in 2024, with new instructions and sales already being made. The Scottish sales market defied the pessimists in 2023, showing annual growth of 2.2% (UK HPI). Sales here outperformed both the UK average and were better than any other UK region, demonstrating the unwavering resilience of the Scottish market (TwentyCi).

-4

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

681

3 Higher -1

2023 was a pivotal year for us.

The Stonehouse brand was integrated into D.J. Alexander, further consolidating our position as a market leader across Scotland.

The recent acquisitions of Eve Brown and Garden Stirling Burnet will further expand our footprint in key Scottish lettings markets. We have entered 2024 with enthusiasm and positivity and are looking for further opportunities to strengthen our business.

Not only have we grown through acquisition, but our individual branches are also outperforming.

On the sales side, in 2023 the average number of applicants per branch was up 53% and exchanges were up 46% on the previous year. The rental market is also buoyant, with Scotland seeing annual growth of 8.5% (HomeLet, Dataloft, December 2023).

2023 compared to 2022

Supply

Lower

Propelling forward

+3

Activity

Lower

Lomond Quarterly Insight | 6

Exceeding expectations

2023 compared to 2022

Lower

David Alexander Regional CEO

£

Lower

Higher

Properties are also selling quickly, on average in 42 days (Rightmove), in part due to the Scottish conveyancing system.

The reasons for people moving won’t change, and the outlook for 2024 is much more positive, underpinned by falling inflation and mortgage rates.

Taking a long-term view, very few people regret buying a property, and well-presented properties sell easily.

With property prices holding steady, and predicted to grow in the mediumterm, now is a good time to be thinking of a buy-to-let investment. Spreading investment risk is always a good strategy, and carefully selected residential property, in popular rental areas can achieve both income and capital appreciation. In Q3, the average gross rental yield in Scotland was 8.2% (Rightmove).

Our property wisdom and expertise enable clients to minimise risk and make optimal decisions. We source properties and attract the best tenants, managing the end-to-end process and ensuring regulatory compliance. Many of our landlords have been with us for years, testament to a relationship based on trust, respect and outstanding service.

Scotland

+8.5% annual rental growth in Scotland

Dataloft, HomeLet year to December 2023

-4

Lomond Quarterly Insight | 7

11

Yorkshire

Acquisitions in the past two years

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

Yorkshire

SALES Supply

Demand

New instructions per branch

Applicants per branch

96

568 Lower

Higher

Lower

+1

Martin Elliott Regional CEO

“Falling mortgage rates and improved sentiment are likely to entice first-time buyers and buy-to-let landlords back to the market in 2024.”

Higher -1

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

57

6 Lower

Higher

Lower

+3

LETTINGS

Higher -2

2023 compared to 2022

Supply

Demand*

New instructions per branch

Applicants per branch

140

291 Lower

Higher

Lower

-3

Higher +2

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

298

2 Lower

Lomond Quarterly Insight | 8

Growing stability

2023 compared to 2022

Higher

-1 *viewing numbers are used in Yorkshire as a proxy for historic demand levels

Lower

Higher

Increasing confidence

Rental market

Prices in Yorkshire and the Humber remained remarkably resilient during 2023, ending the year with a 0.6% annual growth in asking prices in the region (Rightmove). A high proportion of cash buyers has helped keep the market buoyant. Falling inflation is improving market sentiment and opening up opportunities for more people as pressures ease. The Bank of England is likely to reduce the base rate later in the year, which should encourage more first-time buyers and buy-to-let investors into the market, having been biding their time in 2023.

The possibility of more aggressive pricing for buy-to-let mortgages and potential policies to aid first-time buyers as part of general election pledges could give the market a further boost.

Constrained supply and high demand will continue to support strong rental growth in Yorkshire, currently at 10% (HomeLet, Dataloft, December 2023).

This gives landlords the opportunity to earn more from their properties, and tied in with the interest rate falls, buy-to-let investors should be able to benefit from higher yields.

With house prices having defied expectations of larger falls, confidence in the market is growing, and we expect sales for larger family semi-detached houses and from aspirational buyers to pick up. There is a growing willingness and understanding of the modern method of auction, offering speed and security for both buyers and sellers.

With a higher quality of product coming to auction, properties are often going to a bidding war.

The Renters (Reform) Bill provides both challenges and opportunities and our specialist teams offer support to around 8,000 landlords. We discuss High proportion of cash buyers

£ 35% of sales in Yorkshire and The Humber

35%

of sales in York

key objectives and motivations with each landlord. For some, high yields are most important, and these can be found particularly in two-and threebed properties in our region. Other landlords are looking for maximum capital growth, and for some, location is paramount.

Regulations The requirement for all newly-rented properties to have an EPC rating of at least ‘C’ by 2025 has been scrapped.

Although nearly half of landlords have already invested between £500 and £20,000 on improving or investing in their property over the last year, this investment will still have benefits.

Energy-efficient properties will be more attractive to renters and be ready for future legislative shifts. Other positive news includes changes to the Building Safety Act, impacting the sale and remortgaging of properties which had restrictions levied.

Leeds City Centre, in particular, will benefit from the Building Safety Act, meaning that previously restricted leasehold properties can now be released for sale.

UK HPI November 2023

+5

Lomond Quarterly Insight | 9

200+

Manchester and the North West

Number of employees

Manchester and the North West

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

SALES Supply

Demand

New instructions per branch

Applicants per branch

134

1000 Lower

Higher

Lower

-1

Jason Watkin Regional CEO

“Our acquisitions of Denton Clark and Harvey Scott, in Chester and Stockport respectively, have broadened our local footprint.

We look forward to expanding this further in 2024.”

Opportunities for 2024

Higher +3

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

96

7 Lower

Higher

Lower

-1

LETTINGS

Higher +4

Supply

Demand

New instructions per branch

Applicants per branch

65

1126 Lower

Higher

Lower

Higher +1

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

230

17 Lower

Higher -2

Lower

There are significant opportunities for investors this year. While on the one hand prices are softening and mortgage rates are falling, rents are set to grow 19.6% by 20281 and capital growth is set to resume with a forecast of 15% by 20282. There are over 4,000 build-to-rent units in the pipeline in Manchester, providing further investment options and we are working closely with our Investment Management team to support local investors.

We have expanded our auction offering, which has grown by a huge 233% year-on-year, giving sellers a new option. With over one-in-four sales falling through (Quick Move Now) and increasing time on the market, currently 69 days in the North West (Rightmove), the decreased fall-through risk and quicker transaction time is appealing.

2023 compared to 2022

-2

Lomond Quarterly Insight | 10

Looking forward

2023 compared to 2022

8.3% annual rental growth in the North West

Higher

Goodlord, December 2023

The first-time buyer market was particularly strong in 2023, seeing a 5.1% rise in prices.

pre-pandemic levels, and any price moderation will be relative to buyers and sellers. In the first-time buyer market, last year saw a 1.5% growth in annual prices (Dataloft, UK HPI November 2023).

Improving efficiencies

In a recent survey by the Property Academy, 89% of people said they considered it useful, nice to have, or essential for an agent to have a high street presence3. We continue to expand and invest in our high street branches. Our clients benefit from our local knowledge and branch expertise, which is underpinned by the nation-wide corporate strength and investment provided

by Lomond.

As our business expanded in 2023, we invested in technology to hone our administrative and operational skills.

The launch of our Student Hub has already assisted landlords in finding the best tenants efficiently.

Our on-market and off-market prospecting tools help streamline operations for both buyers and sellers and reduce time on the market.

HelpmeFix also went live recently, improving services for tenants and diminishing unnecessary call-out charges for landlords.

With the increasing professionalisation of the lettings market, the need for landlords to align themselves with knowledgeable agents who can offer professional support and tools is growing.

14%

would consider selling their property through an auction service, up from 9% in 2022

Outlook The outlook for 2024 is positive, with the economic diversity of Manchester helping to give a greater degree of certainty. Prices remain well above

Dataloft, Property Academy Home Moving Trends Survey 2023

+4 1 3

Dataloft consensus of forecasts , 2Dataloft consensus of forecasts, HM Treasury (independent average) Dataloft, Property Academy Home Moving Trends Survey 2023

Lomond Quarterly Insight | 11

5,021

Birmingham and West Midlands

Number of properties under management Birmingham and West Midlands

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

SALES Supply

Demand

New instructions per branch

Applicants per branch

49

391 Lower

Higher

Lower

-2

Richard Crathorne Regional CEO

“With more certainty in the market and improving sentiment, we’re expecting a shift back to more aspirational moves.”

Changing with the times

2023 compared to 2022

Higher -1

Activity

Supply/demand

Exchanges per branch

Applicants per instruction

23

8 Lower

Higher

Lower

-2

LETTINGS

Higher +1

2023 compared to 2022

Supply

Demand

New instructions per branch

Applicants per branch

129

1269

Expansion

Robust

2023 has been a transformational year.

We have extended our reach into the East Midlands area including Nottingham, and further strengthened our position in Birmingham and Solihull. Extending our leverage in key student markets, we ended 2023 with over 5,000 properties, significantly more than the 2,800 at the start of the year. Investment in our offices and staff has enabled us to increase the number of instructions per branch by 73%. Working with local charities, including our partner charity Centrepoint, has been particularly rewarding, and we are proud to have raised £20,000 this year to give back to the local community.

Our market has proved robust considering the uncertainty in 2023 and increased interest rates, with 21% of moves being “needs based” (Dataloft, Property Academy Home Moving Trends Survey 2023). The market appears to be turning a corner, with easing inflation and falling mortgage rates. Five-year fixed-rate deals are now being found for less than 4%. The HS2 buzz has reignited, further strengthening the residential and commercial sectors. Employees value the ease of commuting and the work/ life balance the region offers.

TO 2022 LET Lower

Lower

Higher

Higher

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

360

10 Higher +3

Lomond Quarterly Insight | 12

2023

-1

+4

Lower

TO LET

73%

increase in the number of lettings instructions per branch 2023 vs 2022 Lower

Higher

Our expertise means we can support landlords with compliance, offering peace of mind while protecting their investment.

Landlords with more properties are most likely to expand

Professionalisation The rental sector is becoming more professional and landlords with multiple properties are increasingly driving portfolio growth. 28% of landlords with over ten properties are planning on expanding in the next few years (Dataloft, Property Academy Landlord Survey 2023). We have invested heavily in our people, and put around forty staff through professional qualifications, which are growing in importance. In a recent survey, 87% of respondents thought estate agent accreditations were important or very important (Dataloft, Property Academy Home Moving Trends Survey 2023).

We work closely with our Investment Management team to help landlords expand their portfolios, capitalising on the abundant opportunity and high yields in Birmingham and the East Midlands’ rental sectors. The rental market is growing rapidly, fuelled by a strengthening commercial sector and increasing young professional and student populations. A lower cost of living than the capital means it’s no surprise that many big names such as Deloitte are relocating.

Lomond

-3

Lomond Quarterly Insight | 13

11

South Coast

Number of branches

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

South Coast

SALES Supply

Demand

New instructions per branch

Applicants per branch

142

645 Lower

Higher

Lower

-2

Paul Broomham Regional CEO

“Our advice to landlords who are considering exiting the market would be to sit tight for a better return on capital growth, and to keep investing in your property to get the very best returns.”

Exchanges per branch

Applicants per instruction

103

5 Lower

Higher

Lower

-1

Higher +3

2023 compared to 2022

Supply

Demand

New instructions per branch

Applicants per branch

62

1326 Lower

Higher

First-time buyers most active house mortgage purchasers in 2023

Higher +2

Activity

Supply/demand

New tenancies agreed per branch

Applicants per instruction

252

21 Higher

Which properties do buyers most desire?

Ready-to-move-in homes are the most in demand Turnkey

61%

In need of refurbishment

26%

Fixer-uppers

12% Dataloft Poll of Subscribers

Lower

-1

-1

Many buyers and sellers stayed put in 2023, looking from the sidelines as inflation and mortgage rates peaked then started to fall. Despite a slight cooling, properties are still selling for good prices, on average 21% above pre-Covid prices in Brighton (Dataloft, UK HPI). It is currently a buyer’s market, where sellers have to price competitively or have a premium product. However, the scales should tilt later this year as interest rates fall and buyers who were sitting on the fence rejoin the market. First-time buyers should continue to be a strong buyer group, partly supported by the Bank of Mum and Dad, one of the biggest deposit lenders in our area.

+1

Supply/demand

LETTINGS

Buyers rejoining the market

Higher

Activity

Lower

Lomond Quarterly Insight | 14

Market in motion

2023 compared to 2022

Lower

Higher

Lomond

41%

50%

54%

2013

2021

2023

Yorkshire Building Society

Up to standard With increased costs of building work, ready-to-move-in properties are the most in demand. Our advice to sellers and landlords is to ensure your property is up to standard, with painted walls and clean carpets, and you will comfortably see a payback when selling or renting. There has also been a noticeable increase in buyer interest in higher EPC rated properties.

With 78% of renters and 81% of buyers saying EPC rating is important (Dataloft, Property Academy Renter

and Home Moving Trends Surveys 2023), it is worth investing in energy efficiency.

Student market opportunities The student market will remain one of the key opportunity areas in 2024, with this large and vibrant sector comprising 6% of the renter market in 2023 (Dataloft Rental Market Analytics, Brighton and Hove). The massive undersupply is supporting rapidly rising rents in this market, increasing by up to 8% in the current academic year and by 5% in the next (Lomond).

Growing demand, rents and capital growth make HMOs an attractive investment opportunity. Students are increasingly discerning, looking for properties ready to move in and finished to a high standard.

Sharing The professional sharer market in Brighton is growing, with over half of employed renters aged between 20 and 29 (Dataloft Rental Market Analytics). This means rental demand will continue to be strong in 2024, particularly for two-and three-bed houses which are currently getting up to thirty viewings.

+3

Lomond Quarterly Insight | 15

18,600 Single-family rental homes under construction or in the pipeline.

25%

Investors are increasingly looking to the single-family housing market, attracted by the potential size and stability the sector offers.

Proportion of families in the private rented sector Dataloft Rental Market Analytics 2023

British Property Federation, as at end Q3 2023

Lomond Investment Management

Single-family housing Who lives in houses?

Couple/Shared

Tenants living in houses, by household type

Family Single

Growing sector

Lucy Jones Chief Operating Officer

20% 10% 0% UK

Scotland

Wales

South West

South East

West Midlands

The uncertainty in the private rented sector (PRS) means that tenants are increasingly seeking stability and longer-term housing solutions. People are renting for longer, with more than two in five families ideally wanting a lease length of over 24 months (Property Academy Renter Survey 2023). 41% more tenants are looking to move than in 2019, and available supply is down by 35% (Rightmove).

There is a clear need for the institutional sector to provide solutions to an increasingly wide demographic of tenants.

30%

East Midlands

Seeking stability

50% 40%

East of England

Property Academy Renter Survey 2023

70% 60%

Yorkshire and the Humber

Lomond Quarterly Insight | 16

42% of families would ideally like a lease length of over 24 months

80%

North West

The increasing appetite for SFH can be explained by its stability and potential for long-term gain. While overall Build to Rent investment was subdued in H1 of 2023 (down 21% on the same period last year), SFH saw record volumes of investment of £460 million in the same period (CBRE).

More than 24 months

90%

North East

2023 was a pivotal year for Lomond Investment Management, expanding our single-family housing portfolio and diversifying investments across the country. SFH is the fastest growing aspect of our business, with already more than 1,000 pipeline units going live this year.

100%

London

“As the rental market grows, so do tenant expectations, and Build to Rent providers are geared to meet these. At Lomond Investment Management we are adaptable, always evolving to respond to changing tenant and client needs.”

The single-family housing (SFH) sector continues to expand rapidly. There are now more than 28,000 SFH homes in the planning pipeline, 11% of all Build to Rent (BTR) homes. Of these, 9,600 are complete, over 10,000 units are under construction, and 8,600 are in the planning pipeline. BTR is growing countrywide, and over half of all UK local authorities now have BTR in their planning pipeline (British Property Federation, as at end Q3 2023).

At both a national and local level, Lomond has a wealth of experience in the private rented sector, making us uniquely placed to understand and advise on singlefamily housing.

Although the average renter in a house is older, with a higher income than those in apartments, they spend a similar proportion of their income on rent so are not more stretched in terms of affordability.

Dataloft Rental Market Analytics, Please note, figures may not add up to 100% due to rounding

Attractive sector Demographics The majority of the UK’s rental stock are houses, rising to 88% in some regions, yet the majority of institutional investment has been in apartments.

We delve into the demographics to understand who lives in houses. amilies make up 42% of those F renting in houses; couple/sharers 45%; and singles 13%. The proportion of families renting in houses is lowest in London (38%) and rises to 45% in the South East.

Dataloft Rental Market Analytics

enants in apartments are more likely T to be younger. In the UK over half of apartment tenants are aged under 30, compared to 36% of house tenants.

The age range in houses is also more distributed: 15% are over 50 in houses, less than 10% in apartments.

Incomes are generally a little higher for tenants in houses, 13% earn over £50k versus 10% of flat earners.

More mature tenants hold appeal as they typically: • Look for stable and longer-term housing: reducing vacancy rates and turnover.

• Tend to have steady incomes: ensuring reliable rent payments.

• Possess an established rental history: reducing landlord risk.

• Have a quieter lifestyle: minimising complaints.

• Responsible about maintenance: reducing the likelihood of damage.

Lomond Quarterly Insight | 17

Lomond Investment Management TENANT PRIORITIES

A BESPOKE SERVICE

What tenants want

Professional management

Product quality in the private rental market varies significantly, and some feel more comfortable renting a well-regulated and properly managed BTR home. A parking space, garden and fast broadband speed are key requirements of the singlefamily market.

Tenants have high standards and expect a professional service. For real success, investors must have a clear line of communication with their tenants, provide exceptional service and invest in technology and people on the ground to meet their needs.

What is important to families?

Percentage important or very important for family tenants

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Parking space

Property maintenance

A garden

Speed of resolution

Broadband speed

Speed of response

Local community

Ease of reporting issues

Recently fitted kitchen

Listening and understanding

Recently fitted bathroom

Professionalism and courtesy

Recently decorated

Knowledge and interest

Pet-friendly

Property upgrades

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.

Managed developments Annington Build to Rent 207 units

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

Marketing and lease up

Services

• 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

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

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.

The Shackles Sale of freehold investment of whole development 25 apartments

Off-shore trust Central London portfolio 72 units

Services • Lettings and Property management

Contact: lim@lomond.group Dataloft, Property Academy Renter Survey 2023

Dataloft, Property Academy Renter Survey 2023

The importance of good relationships

33%

One third of tenants don’t renew their rental agreement because they are unhappy with the landlord or management service Dataloft, Property Academy Home Moving Trends and Renter Surveys 2023

Lomond Quarterly Insight | 18

61%

of those who live in BTR intend to renew their rental agreement when it expires versus 54% who don’t live in BTR Lucy Jones Chief Operating Officer

Nick O’Reilly Senior Director

Kenny Ord Operations Manager Lomond Quarterly Insight | 19

Lomond property services

Our Lomond network

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.

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 Troy Mills, Troy Road, Leeds LS18 5GN

Contact info@lomond.group

The UK’s leading network of Sales & Lettings agents

Ed Phillips Group Chief Executive

Lucy Jones Chief Operating Officer

Ian Sutherland Chief Financial Officer

In conjunction with

dataloft.co.uk Lomond Quarterly Insight | 20

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: January 2024 Analysis, editorial, design, graphics and charts by Dataloft.

Property wisdom at work In conjunction with

dataloft.co.uk Lomond Quarterly Insight | 22