Biannual ReportQuarter 1-2 2018

cubittandwest.co.uk

Annual Report 2018

• Marketoverview

Residential House Sales4

• Mortgagereview• Competitionandinnovation• Products

10 Financial Market

• Thequestfornewdevelopmentsites• Creatingbuyersandbuildingchains• CouldtheNewHomesmarketsurvive

withoutHelptoBuy?

8 Development & New Build

• StickortwistwithBuy-to-Let?• Longertenancies• Theperfectstormforrentalprices?

6 Letting and Investment Market

• Proudtogiveback• TheArunWay• What’shappeningin2018?

12 Arun in the Community

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Annual Report 2018

Message fromour Group Managing Director

Forthefirsthalfof2018,ArunEstates–knownlocallytoyouaseitherWard&Partners,Cubitt&West,DouglasAllen,PittisorHadleysLondon–hasseenachallengingmarketwheretheavailablehousingstockhasincreasedasaresultofthenumberofsalesreducing.Onpages4&5,AldoSotgiuexplainswhyacorrectioninpricesisnotnecessarilyabadthingwhilst,lateron,KeithLovelldiscussessomegreatmortgageproductsandinnovationsnowavailable.Onethingofwhichyoucanrestassured:propertythatiswelllocatedandrealisticallypricedwillalwayssellinalmostanymarket.Theadage“location,location,location”isastruetodayasithasalwaysbeen.Developersarestillbuildingandthestockofnewbuildswehaveavailableis14%higherthanthistimelastyear.JasonWillettsdiscussestheneedfor

newlandtobefoundfordevelopmenttosatisfydemand.HealsocommentsonthecontinuedimportanceofHelptoBuytoassisttheNewHomesmarket.JasonBunningdiscussestheissuesfacingtherentalmarketwiththeoverallstockinthemarketplacereducingassomelandlordsdecidetoselltheirrentals.Thisdecisionhasresultedfromvariousgovernmentpoliciesdesignedtosqueezetheprivately-rentedsector.Iwoulddescribethisasa“workingmarket”whereexperienceandgoodadviceareessential.Iwishyoutheverybestofluckinwhateveryourinterestmaybeinthemarketplaceand,ofcourse,ifwecanhelpyouinanywaypleasegetintouch.

I would describe this as a “working market” where experience and good advice are essential.

David Lench FRICS

ManagingDirectordavid.lench@arunestates.co.uk

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Annual Report 2018

How is the south-east’sproperty market?

Market Overview

There is a lot of speculation about the property market, so I am happy to share some thoughts based on our research of over 9,000 homes we have put on the market in the first half of 2018. New properties onto the market rose marginally and, with current available properties in the south-east region 14% higher than the same time last year*, this is great for buyers as they have a wider choice. Consequently, buyers need even more help and advice to steer them in the right direction for a home that really suits their needs. Whilst most customers start their home buying activities online, finding the right home can become a bit of a lottery – so getting advice from an agent that has a good understanding of suitable properties is invaluable to those motivated buyers who might miss out on their dream home, simply by clicking buttons online.*Arun Estates available housing stock Jan-June 2018

Aldo SotgiuManaging Director of Operations

aldo.sotgiu@arunestates.co.uk

How’s the market?Property on market and buyer activity

Property stock Buyer activity

Q1-Q2 2018 Q1-Q2 2018

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Annual Report 2018

Theaveragesalepriceinthefirst6monthsincreasedby2.94%‡andvariedconsiderably,withsalepricesinKentupbyover4%comparedto0.9%inSussex.Ofcourse,therearelotsoffactorsthataffecttheindividualpricesofpropertiessoit’sdangeroustoapplya“onesizefitsall”scenario.Theacceptedwisdomisthatifyoupriceyourpropertycorrectlytobeginwithyoustandamuchbetterchanceofachievingthebestpossiblesaleprice,soitisimportantforsellersnottobedrawnintothinkingmarketingapropertyatahigherpricetostartwithisgoingtoresultinahighersaleprice.What’smoreimportantissensiblepricingtocreateasmuchbuyerinterestaspossible.Higheravailablehousingstocksandsimilardemandpointstowardssomepricecorrectionneededinthemarket,whichisn’tnecessarilyabadthing.Granted,ifyousellyourhomeinarisingmarketyouwillgetmoreforitbutyouwillalsohavetopaymoreforthenextone.Inshort,housepriceincreasesareslowingdown;thenumberofavailablepropertiesishigherand,whilstbuyeractivityisstillstrong,somepricecorrectionisneededinthemarket.Therearelotsofotherfactorsthataffectbuyerandsellerconfidence–whatremainsaconstant,ispeopleneedingsomewheretolive.

Area highlightsWallington–Surrey

Epping–Essex

WallingtoninSurreysawoneofthebiggestpercentageincreasesfromQ42017toQ12018inLandRegistrypricedataat4.6%–movingtheaveragepricefrom£382,989to£400,563.

…Inthesameperiod,Essex‘sEppingalsosawa3.2%increaseoftheaveragepropertyprice,changingto£391,699from£379,483.

+4.14%Kent

+2.69%Surrey

+0.90%Sussex

+2.94%South-east

+3.16%Essex

‡ Arun Estates internal Average Price Change SOLD (stc)

Jul - Dec 2017 vs. Jan - June 2018

South-east prices movement

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Annual Report 2018

Has the penny droppedon the investor market?

Have rents risen in the last 5 years?

Yes–generallyabovehistoricallylowinflationlevels,butmostlyaffordableandreflectiveofaverybuoyantmarketplace.Withfewerpropertieswithintheprivaterentedsectorandconsistentdemand,thislevelofgrowthislikelytogainpaceintheshorttomediumterm.

Stick or twist with Buy-to-Let?

Itwillcomeasnosurprisethatbuy-to-letlandlordsofallkinds–accidentalandprofessional–arestartingtoconsider,inthefaceofseeminglyneverendingnewlegislationandregulation,leavingthebuy-to-letarena.Weseesignsofthisgrowingbutwouldadvisesomecautionatthisstage.

Thereareanumberoffactorstoconsider.Tenantnumbersareover10%upandonlylikelytoincreaseasNilDepositSchemesbecomemorewidespread,allowingpeopletorentwithoutaheftylumpsum.Inaddition,thetenantfeebanforagentslikelytocomeintoforceearlynextyearwillmakeiteveneasiertorent.Againstabackdropofcontractingavailablerentalstock,thelawofsupplyanddemandcouldleadtogreaterrentalyieldsforthosethatholdtheirnerve.

Withfewbetterinvestmentsouttherecurrentlyandthepunitivecostsofre-enteringthemarketposedbytheStampDutysurcharge,cashinginatthisstagecouldbeacostlymistaketorectify.

Jason BunningSeniorDirectorofLettingsjason.bunning@arunestates.co.uk

Longer tenancies

Somewhatagainsttheodds,theArunManagedportfoliohasgrownby13%overthelast12months,helpedinpartbyourdrivetoofferlongertenancies.Morestabilityandsecurityforlandlordsandthepeaceofmindfortenants,particularlythosewithfamilies,allowingthemtoputdownsomeroots,issomethingthatweareverycomfortablewithandthegovernmentiskeentoencourage.Indeed,thereisaconsultationbeingputforwardfollowingonfromthechancellor’shintinlastNovember’sbudgetthatlongertenanciescouldbeencouragedwithtaxincentives,whichwouldbeverywelcomerelief!

£924 +17% Arun avg. rental June 2018

£786 Arun avg. rental June 2013

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Annual Report 2018

The perfect storm for rental prices?

Overall,rentallevelsremainstableastheyhavebeenforthelastfewyears,however,therearestormcloudsonthehorizon.Traditionally,landlordshavebeenreluctanttoraiserents,preferringtokeepalong-termtenanthappy–however,thepressuretocoverrisingcostsisoverwhelming.Inadditiontothosemeasuresalreadyimplemented,inspringnextyearatenantfeebanislikelytocomeintoforceforlettingagents,withmanyseeinglandlordspickingupthecostsoftheadministrationthatstillneedstobecarriedoutandthesecostsbeingpassedoninincreasedrent.ForArunlandlords,however,our2-yearmanagementfeefreezeshouldprovidethemwithsomemuchneededhelp,stabilityandreassurance.

+13%Arun’sManagedportfoliohasincreased,despitechangesinthemarketplace,June2017-June2018

19 specialist officessupportedbyournetworkof109high-streetbranches

+10% CustomersAgrowingnumberoftenantsseektomakehomewithus.

Less than 4%Weproactivelyhelpstrugglingtenants,sorentarrearsacrossourManagedportfolioareatrecordlowsof3.91%.

Arunstats:Jan-June2017&Jan-June2018

Average rental prices in the south of England

Area Averagerent

1.GreaterLondon £1,586

2.South-east £1,008

3.South-west £805

4.Wales £604

5.WestMidlands £678

6.EastofEngland £911

7.EastMidlands £617

8.North-west £692

9.Yorkshire&Humberside £628

Source:HomeLet,RentalIndexMay2018

1

2

6

3

45

7

9

8

TM

THERENTALINDEX

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Annual Report 2018

The quest for newdevelopment sites

Creating buyers and building chains

Withfootfalllowerthanlastyear,anotherfeatureofthecurrentmarketisthenumberofcustomersapproachingus,eitherwithouthavingyetsoldtheirexistingproperty,orhavingnotevenputitonthemarket.Whileitwouldbeeasytodismisstheseasunmotivatedbuyers,wehavemaintainedandindeedimprovedthesalesratesacrossmanyofourdevelopmentsbyuseof“MakeYourMove,”buildingloyaltytothedevelopmentsthisiswe‘rethedeveloperwouldcontributetowardsmovingcosts.Thisisatrendwebelievewillcontinuefortheremainderoftheyear.

Jason WillettsLand&NewHomesDirectorjason.willetts@arunestates.co.uk

NewReservation:

+14%Up14%onthesameperiodtolastyear.

Facts of Success.

NewLandSalesarranged:

£34.7 milliondelivering

381 plots

The quest for new development sites

Acrossouroperatingregion,whichconsistsofaround57localauthorities,wehaveseenanumberlooseningtheirgripongreenbeltland.Theyarenowbeingforcedtoconsiderthereleaseoftractsofgreenbeltduetotheirinabilitytodemonstratea5-yearlandsupply,inthefaceofanever-growingdemandfornewhousing.

Thepreferencestillremainstoutilisebrownfield,previouslydevelopedland,butthisisbecomingmorescarce,duetopressuresonavailableland,andashortageinthesupplyofnewhousing.BrightonandHoveCityCouncilhave,overthelasttwoyears,releasedseveralurbanfringesitesfordevelopment.

Meanwhile,therecentembargobyWealdenCouncilonnewplanningapplicationsforhousing,causedbyhighnitrogenlevelsintheAshdownForest,hasfurtherexacerbatedthesupplyproblem.

Q1-22018,ArunNewHomesstats

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Annual Report 2018

79% Unsurprisingly,onaparticularschemeofapartments,offeringHelptoBuyhadanuptakeof79%

ArunNewHomesacquiredlandforthis218-apartment/6-floorlandmarksiteforCrestNicholsonPLC,convenientlylocatedinCrawleytowncentre.Itwasintroducedfromastate-of-the-artremotemarketingsuiteadjoiningourhigh-streetbranch,withasuccessfuloff-plancampaignpriortotheshowhomelaunchinMay2018.

Area highlightsCrawley–Sussex

RichmondPark,byHalsburyHomes,isanurbanexpansioninWhitfieldwithPhase1being90,2-,3-,4-&5-bedroomproperties.Thesuccessfulfirstphaseisnowover90%sold/reservedsincelaunch,andwiththenextphaseduetolaunchimminently.

Whitfield–Kent90%

RESERVED OR SOLD

Could the New Homes market survive without Help to Buy?

Inaclimatewheresalesaregenerallyhardertocomeby,thepositivebenefitsofHelptoBuymorethanoutweightheextratimegenerallyinvolvedinprogressingsalesthroughtoexchangeofcontracts.Thisisreflectedinthestatisticalevidencecomingoutofsomeofourmajorschemes,whichclearlyindicatesthatHelptoBuyisstillunderpinningcertainsectorsofthemarket.Thisisparticularlytrueofapartmentschemes.Inonecase,nolessthan79%ofallreservationsweprocessedinvolvedHelptoBuy,whereaswithhousingschemes,thistypicallydropstoaroundathird.

90%RESERVED OR SOLD

(PHASE 1)

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Annual Report 2018

UKbase%rates18%

16%

14%

12%

10%

8%

6%

4%

2%

0

April198

5

May199

3

June

200

0

July200

7

Augu

st2014

March

197

9

Financial view of 2018so far and looking forward

Mortgage Review

TheUKmortgagemarketisinaninterestingplacerightnow.The‘deadcert’raterisethathadbeendiscussedhasn’tarrivedyet.Asaresult,weremainattheincrediblylowrateof0.5%,whichiswherewehavebeensinceMarch2009–exceptforabriefperiodat0.25%betweenAugust2016andNovember2017(seeningraphabove).

Itisunclearifthiswilllastfortoolongas,duringthelatestBankofEnglandMonetaryCommitteeannouncement(21/06/2018),rateswereheldbyavoteof6to3,however,theBank’schiefeconomist,AndyHaldane,votedfora0.25%increase;thiscouldprovesignificantinthecomingmonths,sowatchthisspace.

Keith LovellFinancialServicesManagingDirector

keith.lovell@mortgagemattersdirect.co.uk

TheBankalsocutthisyear’sgrowthforecastdownfrom1.8%to1.4%,andwentontoexplainthattheysawthisadjustmenttobearesultofthebadweathercausedbythe‘BeastfromtheEast’which,intheiropinion,hadcausedatemporarysoftperiodintheeconomy.

Despitetheabovewordsofcaution,withbothinflationandinterestratesrunningathistoricallylowlevels,therehasbeenanincreaseinconfidenceandinvestmentfromUKmortgagelenders,resultinginasurgeofnewproductsandinnovation.Adaydoesn’tpasswithoutsomementionof“RoboAdvice”or“FinTech”(shortforFinancialTechnology),bothhavebecome‘buzz’wordsandweneedtoensuretheydon’tbecometheEmperor’sNewClothes.

0011

Annual Report 2018YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Competition and Innovation

Thissurgeincompetitioncanbeseen,withmanyITcompaniescomingintothemortgagesectorandmakinghugepromisesofamoreefficientpathforthecustomerthroughboththemortgageandpropertytransactionprocesses.Ifthesepromisescanbedeliveredwewillseethetimetakentopurchaseamortgageand/orproperty

Products

TheenergyandcompetitionaroundtheUKlendingmarketshouldbodewellfortheconsumer.Withmanynewandemerginglenderstakingontheestablishedplayers,weareseeingsomeexcitingchanges,manyofwhicharebeginningtofilterthroughtothecustomer.

Weareseeing90%lending,withratesfromaslowas1.84%†,meaningthe‘BankofMum&Dad’cantakearestfromfeelingresponsibleforfindinga15or20%depositinordertohelptheirchildrenontothefirstrungofthepropertyladder.What’smore,atthetimeofwriting,95%lendingismakingastrongreturn.Boththesemeanthattheprospectofowningyourownhomeiscloserthanithasbeenforsometime.

Competitivelong-termfixedratesaremakingawelcomereturnandmanyborrowersaren’tjustlookingatthelowest2-yearfixed,buttakingthetimetoconsidertheirfutureneedsandmakeinformeddecisionsonhowlongtheymightliketoenjoypaymentstability.Again,weareseeingratesfromaslowas2.49%†for10-yearfixedrates

beingsignificantlyreducedandsimplified.Indeed,manycompaniesaretalkingaboutasinglegenericapplicationthatwouldbeacceptabletoawholerangeoflenders–asingledocumentwhichcouldreturnalistofthoselendersthatwouldlendtherequiredamountandtheratesandcostingstheywouldoffer–now,that’stechnologyatitsbest.

forthosewitha40%equity/depositinorfortheirhome.

Nottobeoutdone,manylendersarelookingintotreatingtheirmorematureborrowersfairlyandweareseeingarealchangeinattitudetolendingpastretirement(LaterLifeLending),andadesiretoreallyhelpthosecustomerswhohaveinterest-onlymortgageswithlittleornomeansofpayingofftheoutstandingmortgage.Thisisaveryinnovativeandexcitingspacerightnow.Onethatisverymuchoverdue.

If you are looking for advice, please contact me or one of my team on 01634 731 518.

†Source: Mortgage Brain Classic - Figures correct at 02 Jul 2018

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Annual Report 2018

Arun in the community

The Arun Way

Inadditiontoourcharitableactivitiesatnationalandregionallevel,wealsoplacegreatemphasisonencouragingandsupportinglocalfundraisinginitiativesbyindividualbranchesandmembersofstaff–andwe‘reproudtosaythatin2017weachieved,asacollectiveteam,ourhighesteverannualfundraisingtotal.

Proud to give back

ForArunEstatesandourtradingbrandsofWard&Partners,Cubitt&West,DouglasAllen,PittisandHadleysLondon,helpingothersiscoretoourcompanyvalues.Weareproudthatthroughourcompany’ssuccessandourChairmanPaulRooney’spersonalgenerosity,wehavebeenabletomakeasignificantcontributionbothtocharitableorganisationsandtoindividualfamilies.

£111,1322017

£95,6212016

£103,7992015

£13.7 million since 2010

£102,0002014

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Annual Report 2018

What’s happening in 2018?

However,recordsaretheretobebroken,sothisyear,weaimtodoevenbetter!Wearedelightedtoconfirmthatasacompany,wearecontinuingtoworkwithourprincipalcharitypartners,ActionMedicalResearchforChildren,whothroughvitalmedicalresearcharesavingandchangingchildren’slives.Overthepastyear,ourfundraisingeffortshavebeenspecificallyaimedathelpingtofundthedevelopmentofanewvaccinetoprotectchildrenfrommeningitis.

Eachofouroperationalareasalsohavetheirownlocalcharitythattheycontinuetosupportthroughawiderangeofactivities–frommarathons,ColourandGlitterRunsandparachutejumpsforthemoreenergetic(and/orfoolhardy!),tobake-offs,quiznights,rafflesandothergentlerpursuits.

Asacompany,therealjewelinourcharitycrownistheArunCup,ourownfootballtournament,tobeheldattheGallagherStadiuminMaidstone.TeamsfromDouglasAllen,Cubitt&WestandWard&Partnerswillallbecompetingagainsteachtoseewhocanbringhomethesilverwarethisyearandraisemoremuch-neededfunds.

incorporating:

LondonDOUGLASALLEN:Chingford 02085246331EastHam 02084728140Walthamstow 02085090092Wanstead 02085303741

HADLEYS:Beckenham 02036332608Bromley 02036332608Chislehurst 02036332608Orpington 02036332608Penge 02036332608PettsWood 02036332608WestWickham 02036332608

EssexDOUGLASALLEN:Barkingside 02085514025Basildon 01268293993Billericay 01277631377Brentwood 01277218525ChadwellHeath 02085970043Chigwell 02085012131Epping 01992560600Hornchurch 01708437777Ilford 02085180044Loughton 02085021326Wickford 01268561287WoodfordGreen 02085056343

Isle ofWight

EastSussexWest

Sussex

Hampshire

Surrey

Greater London

Essex

Kent

Over 100 branches across the south-east

SussexCUBITT&WEST:Arundel: 01903884420Ashington: 01903891444Billingshurst: 01403780807Bognor: 01243867632

Brighton: Fiveways: 01273564444LewesRoad: 01273604377Patcham: 01273541934Saltdean: 01273304453WesternRoad: 01273820600Woodingdean: 01273606121Chichester: 01243786581Crawley: 01293522233Crowborough: 01892613361EastGrinstead: 01342314324HaywardsHeath: 01444411132Horsham: 01403269268Lewes: 01273471231Peacehaven: 01273584511Pulborough: 01798875151Rustington: 01903775576Southwater: 01403731901Southwick: 01273870070Uckfield: 01825768915WestWorthing: 01903700657Worthing: 01903262620

SurreyCUBITT&WEST:Banstead: 01737352233Caterham: 01883331000Cranleigh: 01483271567Dorking: 01306883399Horley: 01293785338Leatherhead: 01372373780Purley: 02086608882Redhill: 01737778866Reigate: 01737222020Shirley: 02086543037Sutton: 02086610330Wallington: 2086470011

HampshireCUBITT&WEST:Emsworth: 01243377888Fareham: 01329281364Havant: 02392492708Petersfield: 01730262931Portsmouth: 02392661213Southsea: 02392296396Waterlooville: 02392267244

KentWARD&PARTNERS:Ashford: 01233639531Barnehurst: 01322335525Bearsted: 01622730955Birchington: 01843842551Broadstairs: 01843602546Canterbury: 01227766669Chatham: 01634841243Cliftonville: 01843227447Dartford: 01322288211Deal: 01304361420Dover: 01304214876Eynsford: 01322862844Faversham: 01795535517Folkestone: 01303256505Gillingham: 01634851191Gravesend: 01474352417Headcorn: 01622890435HerneBay: 01227361226Hythe: 01303267473KingsHill: 01732222211Larkfield: 01732847877Loose: 01622744067Maidstone: 01622683737Meopham: 01474813100NewAshGreen: 01474872466NewRomney: 01797363745PaddockWood: 01892836877Rainham: 1634373531Ramsgate: 01843580314Rochester: 01634830925Sheerness: 01795664651Sittingbourne: 01795427272Snodland: 01634245055Staplehurst: 01580893322Strood: 01634716597Tenterden: 01580766002Tonbridge: 01732770755TunbridgeWells: 01892542767Walderslade: 01634865661Welling: 02083016679WestKingsdown: 01474852816Whitstable: 01227772272

Isle of WightPITTIS:Cowes: 01983292345Freshwater: 01983756222Newport: 01983528888Ryde: 01983564646Sandown: 01983407444Shanklin: 01983868777Ventnor: 01983856417

All are trading names of Arun Estate Agencies Limited. Registered Office: St. Leonard's House, North Street, Horsham,

West Sussex RH12 1RJ. Registered No.2597969 England. VAT No: 450-9134-61

Contacts:t:0800854499e:sales@arunestates.co.uk

Residential Sales

Contacts:t:01403215999e:lettings@arunestates.co.uk

Lettings

Contacts:t:01634731518e:enquiries@mortgagemattersdirect.co.uk

Mortgages Contacts:t:0800854499

Conveyancing

Contacts:t:01795535725e:recruitment@arunestates.co.uk

Recruitment Contacts:t:01795534316e:head.office@arunestates.co.uk

Head Office

Contacts:t:01634735695e:corporate.biz@arunestates.co.uk

Corporate Business Contacts:t:01372378948e:lnh@arunestates.co.uk

Land & New Homes

ArunEstatesincorporating:

Helpingyoumoveforwards