Business Review Lucy Real Estate

In 2022, we reviewed our portfolio and began the long-term process to improve the energy efficiency of our rental stock. Carbon reduction is part of the wider challenge, but our plans also include small steps to improve biodiversity and healthy living. Where applicable, we have installed swift boxes and redesigned gardens to protect habitats and preserve the natural world.

EPC ratings

community, from town planners, surveyors and builders to university estate services and tenant groups. In Lucy Properties, these relationships are enhanced through direct letting, maintenance and management, instead of relying on agents.

Introduction

Lucy Real Estate comprises two distinct businesses: Lucy Properties and Lucy Developments.

Lucy Properties is a residential property lettings and management business based in Oxford, UK, with a strong focus on the Oxfordshire region. We are one of Oxford’s largest private landlords. We invest in and manage over 350 properties with over 750 tenants. Service and maintenance are managed in-house to provide the high levels of care that our tenants expect.

Lucy Developments is a property development business, also based in Oxford, with prime sites within a 90-minute commute time from the city. We buy land, devise planning schemes, obtain planning permission, develop and sell high-end properties. We primarily build to a premium specification using high quality, traditional materials to create distinctive and desirable homes.

Market overview

Both Lucy Properties and Lucy Developments have seen another solid year. Rental income has increased, rental properties have been invested in and we end the year with marginally improved occupancy rates. With Lucy Developments, we have increased our landbank and continue to look for sites in prime locations to deliver the planned medium-term growth.

Operations

Lucy Properties manages a range of property types in Oxford and Abingdon, both residential and commercial. In the Oxfordshire region the current imbalance between the supply of rental properties and the demand for housing – coupled with the quality of our accommodation –has delivered a 99% occupancy rate. We are investing in a drive to improve the energy efficiency of our rental properties and, at Lucy Developments, are committed to building highly energy-efficient new homes for sale and rent.

Lucy Developments experienced a challenging year with contractor and utility provider delays, which has had a knock-on effect on our timelines for new builds and subsequently sales. We intend to become more integrated into the build cycle and in 2022, for the first time, operated as the main contractor on a construction project in Ludgershall. Over time, we will become more active in the direct management of trades and materials supply and anticipate the company’s development projects progressing more smoothly in 2023.

Lucy Real Estate has invested in a business process mapping exercise, using an external consultancy in advance of implementing a new management information system. The objective is to ensure the business adopts best practice processes moving forward. By leveraging IT, we can refine our handling of repairs, maintenance and administration, thereby enhancing tenant satisfaction. The first milestone of this two-year project will be in Q1 2023.

Sustainability innovations

Feedback from our regular tenant events tells us that sustainability is important to the people who inhabit our properties. It is also high on the UK government’s agenda: in their recent report, ‘Building for 2050’, the department for Business, Energy and Industrial Strategy estimated that current UK housing stock contributes 17% towards the country’s total carbon emissions.

With our portfolio of properties under Lucy Properties, we are working towards all properties having an Energy Performance Certificate (EPC) rating of at least C. This will reinforce the attractiveness of our high-quality homes. In a similar vein, we are building new properties within Lucy Developments to achieve an EPC rating of A or B. This initiative underpins our commitment to providing quality accommodation for sustainable living.

Our people

Our experienced and knowledgeable people forge enduring relationships with stakeholders across the

During 2022, steps were taken to strengthen the management team with key hires and to invest in training and development for existing members of the workforce. The aim is twofold: to facilitate Lucy Developments becoming a larger business that undertakes the role of prime contractor; and to equip Lucy Properties with extra administrative skills, after Oxford City Council introduced a licensing scheme in Q4 for all rental properties in the city.

Outlook

The fundamentals of the industry are strong. Limited housing stock and a growing population drive long-term demand. The property market in Oxford is particularly resilient: it is an aspirational place to live; new business enterprises are being set up; the county remains at the forefront of technology and research; and the population is environmentally conscious, Oxford being the first UK city to hold a citizens’ assembly on climate change.

Lucy Properties stands to benefit from strong rental demand due to rising interest rates on mortgages. The post-pandemic return of postgraduate students and visiting academics will also have a positive impact, given the close ties between Lucy Properties and Oxford University.

Lucy Developments will be impacted by headwinds in the UK housing market, with housing affordability hit by rising interest rates and cost-of-living increases. This is affecting market confidence and slowing sales as buyers wait to see the impact on house prices. However, we remain confident that the fundamental local economy remains robust and the shortage of new-build, energy-efficient homes in prime locations will drive our sales at the forecasted levels in 2023 and 2024.

Ian Ashcroft CEO Lucy Real Estate