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Keepmoat Annual Report & Financial Statements 2022

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Annual

Annual Report & Financial Statements 2022 Chief Executive’s Review Cont. 5% deposits Lending institutions continue to offer 95% loan-to-value mortgages for new build homes, including those provided through the Deposit Unlock scheme, which Keepmoat has supported from its inception. Positive market positioning The fundamental underpinnings for the UK Housing Market remain strong, with customer demand supported by the continued structural imbalance between new housing supply and need. Furthermore, notwithstanding the increases in the Bank of England Base Rate through 2022 and in early 2023, there remains good availability of mortgages, including for customers with a 5% deposit. Lending institutions continue to offer 95% loan-to-value mortgages for new build homes, including those provided through the Deposit Unlock scheme, which Keepmoat has supported from its inception. Whilst higher interest rates, energy costs and high inflation have all contributed to a rise in cost of living challenges, the affordability of our homes and their high energy efficiency means that they remain attractive to homebuyers with the desire and aspiration to own a home. The end of the Help-to-Buy scheme, which closed to reservations in October 2022, means that there is now only limited and targeted Government support for homebuyers, through the First Homes schemes and Shared Ownership programme. This is not expected to significantly impact demand from first time buyers for a Keepmoat home. Demand from our Registered Provider partners and from the Private Rented Sector has remained strong throughout 2022. We believe that our multi-tenure partnership approach and expertise in the first-time buyer market provides some resilience should any adverse market effects arise, and we will continue to closely monitor market conditions into the future, considering wider UK and global political and economic developments. 15 KEEPMOAT.COM

Strategic Report Building safety pledge In April 2022 we signed the Department for Levelling Up, Housing and Communities (“DLUHC”) Building Safety Pledge, giving our commitment to investigate and remediate any life critical fire-safety issues on buildings over 11 metres in England developed by the Group in the 30 years prior to 5 April 2022. The manner in which this will be done has now been formalised in a contract published on 30 January 2023. In practice, Keepmoat has traditionally only built houses sold as new homes and has very few apartment schemes in its current and legacy development portfolio. Keepmoat has identified all those buildings in the 11 metres and above category in England and following an internal assessment, the Board is not currently aware of any material life-critical fire safety issues with respect to these buildings. However, Keepmoat is committed to ensuring that its customers have the peace of mind of knowing that it is a responsible developer and therefore Keepmoat Limited (as Participant Developer) signed the Building Safety Pledge on 13 March 2023. Keepmoat is also making a significant contribution to help fund remediation of buildings built or refurbished by other organisations as, like all housebuilders, we have also been subject to an additional 4% Residential Property Developer Tax (“RPDT”) from April 2022, introduced to raise at least £2bn over a 10-year period. Keepmoat continues to believe that building safety is an industry-wide issue involving many types of organisations and therefore needs an industry-wide solution. Life-critical fire safety Keepmoat is committed to ensuring that its customers have the peace of mind of knowing that it is a responsible developer and therefore it signed the Building Safety Pledge contract. Government policy and housing supply Over the last 12 months the political landscape has been very unstable, which has had a knock-on effect on the housing industry. Just one week before the end of our financial year, the new Prime Minister had begun assembling the third government of 2022 following the resignation of Liz Truss whose position became untenable after the turmoil created in the financial markets by the September mini budget. With two changes of Prime Minister since the Queen’s Speech and, despite Prime Minister Rishi Sunak’s pledge to deliver the 2019 manifesto, uncertainty remains for the housing sector as to which policies will be taken forward. Additionally, the Government has so far been slow to clarify or communicate its plans to support the industry, which is a cornerstone of the UK economy. The Levelling Up and Regeneration Bill was outlined in the Queen’s Speech, but the detail has not yet been announced. The crucial matter of the target of 300,000 new homes per year, a driver of housing supply, was subject to a strong political challenge and has since been diluted with the targets “advisory”, rather than compulsory. Standard in 2025. Changing requirements on energy efficiency, ventilation and accessibility, together with customer focussed objectives, have been embraced by the Group as a positive opportunity for the continued application of new innovation to the development of our house type range. We have welcomed opportunities to provide input into the new regulations through working groups and have highlighted the need for a cut-off point for consultation from which we can confidently finalise designs. We welcome the Government’s continued focus on bringing forward brownfield land, and we believe our work with local authorities across the UK, including in Sheffield, Doncaster, Newcastle, Leicester, and Nottingham provides model approaches for others to follow. For example, through our partnership with Newcastle City Council, our scheme at Scotswood will deliver over 1,100 new homes over the next 10 years. The Government continues its programme of revisions to Building Regulations. A new Part L for ‘Conservation of fuel and power’ came into effect in June 2022 as part of a transition towards the introduction of a Future Homes 16