30% profit on every Persimmon home sold last year thanks to taxpayer 'help to sell' subsidy

Tony Gosling tony at cultureshop.org.uk
Fri Mar 1 23:47:34 GMT 2019

Persimmon banked £66,265 from every one of the 16,449 homes it sold last year.



Outrage as help-to-buy boosts Persimmon profits to £1bn


Builder condemned for making massive gains from taxpayer-funded programme

Neate Wealth correspondent 
<https://twitter.com/RupertNeate> @RupertNeate Tue 26 Feb 2019

made a record-breaking £1bn profit last year – 
equal to more than £66,000 on every one of the 
homes it sold – with almost half of its house 
sales made through the taxpayer-funded help-to-buy scheme.

The York-based builder, which sparked widespread 
public and political outrage for attempting to 
its former chief executive Jeff Fairburn a bonus 
of £110m, posted pre-tax profits of £1.09bn.

The huge profit – the biggest ever made by a UK 
housebuilder – means Persimmon banked £66,265 
from every one of the 16,449 homes it sold last 
year. The average selling price was just over £215,000,

The profit from each house it sells has nearly 
tripled since 2013, when the government 
introduced the help-to-buy scheme in an attempt 
to help struggling families buy their first home. 
Last year the company paid an average of just 
£31,536 for each plot of land, and spent £112,295 
on actually building each home.
Vince Cable, the Liberal Democrat leader, accused 
Persimmon of “pinching their profits from the 
public purse”, adding: “Far from benefiting first 
time buyers, the major effect of help-to-buy is 
to drive up demand while having no effect on 
supply. The result is not help for those who need 
it, but a boost to the profits of big developers.”

Cable demanded that the government immediately 
end the help-to-buy scheme and take action to 
crack down on “outrageous” executive pay. “This 
greed is coming at the expense of the public 
purse through the subsidies in help-to-buy,” he 
said. “Help-to-buy is a scam, enriching 
developers while forcing buyers off the ladder by pushing up prices.”

Greg Beales, the campaign director of the housing 
charity Shelter, said: “Persimmon represents 
everything that is wrong with the housebuilding 
system. The firm has generated huge profits from 
taxpayer subsidies whilst doing very little to 
help solve the housing crisis we face.

“Piecemeal schemes such as help-to-buy have made 
the situation even worse by inflating house 
prices and giving big developers a leg-up – while 
doing next to nothing to help those most in need 
of a genuinely affordable home.”

Many Persimmon customers have complained that 
their homes are poorly built, with pipes 
springing leaks and windows cracking just days 
after they moved in. Persimmon has been awarded 
only a three-star Home Builders Federation 
customer service rating every year since 2014, 
compared with four and five stars for its major rivals.

Victoria Baker, who bought a £380,000 
five-bedroom Persimmon house in Ingleby Barwick, 
near Stockton, last year described the building 
work on her home as horrific. “We noticed leaks 
straight away as we were putting things away 
under the sink; there was a pool of water under 
the sink in the kitchen,” 
said. Baker, who lives in a home built by Charles 
Church, a brand owned by Persimmon, said numerous 
other leaks later appeared. She is part of a 
Facebook group called 
Church (Persimmon) Homes From Hell”.

Persimmon has made so much money in recent years 
that it triggered a near-£500m bonus bonanza for 
its 150 most senior bosses. The company’s former 
when he recognised that the huge bonuses were 
wrong, but was unable to prevent them being paid out.

Persimmon’s former chief executive Jeff Fairburn 
was eventually persuaded to give up part of his 
payout but still walked away with £75m. His 
replacement, Dave Jenkinson, collected more than £40m.

The company’s huge gains from the 
scheme, in which the government provides a 
guaranteed interest-free loan, have sparked a 
ministerial review. James Brokenshire, the 
housing minister, is said to be “increasingly 
concerned by the behaviour of Persimmon”.

A source close to the minister said: “Given that 
contracts for the 2021 extension to help-to-buy 
are being reviewed shortly, which overall is a 
great scheme helping hundreds of thousands of 
people into home ownership, it would be 
surprising if Persimmon’s approach wasn’t a point of discussion.”

A government spokesman said officials would 
“carefully” examine the vast profits made by 
and other housebuilders. “Help-to-buy will look 
different,” the spokesman said. “We’ve already 
said it will look only at first-time buyers and 
we will definitely not be funding leasehold 
properties. We will look carefully at developer performance over recent years.”

Jenkinson, who was appointed Persimmon’s new 
chief executive on Tuesday, defended the 
company’s use of the help-to-buy scheme, saying 
the company had “helped hundreds of first time 
buyers” and “given them the opportunity to own their own home”.

He said the help-to-buy scheme was just one 
element behind the firm’s financial success and 
the government had not contacted the company with 
any concern about its use of the help-to-buy scheme.

Jenkinson said his £40m bonanza “isn’t 
distracting [him] – I’m incredibly focused”. He 
said his bonus payment was tied up in Persimmon 
shares, which he had no intention of selling 
soon. He was not paid a bonus in 2018 and will 
not receive one in 2019. His basic pay is £518,000.

More than a year ago, Fairburn pledged to set up 
a charity with 
“substantial proportion” of his bonus but has so 
far failed to do so. He has not registered a 
charity with the Charity Commission or made any 
inquiries about how to set one up.

Independent property expert Henry Pryor said: 
“There is no doubt that help-to-buy has been the 
crack cocaine of the housing industry. Listen 
carefully and you can hear the housebuilder 
bosses chortling into their cornflakes as 
taxpayers pump up the executive bonus pool.

“With 100,000 kids waking up in B&B accommodation 
this morning, it’s a national outrage that the 
government is still pouring accelerant on to the 
smouldering housing market. Bosses who have 
trousered the profits from selling to 
taxpayer-supported buyers have taken the place of 
bankers on my dart board. They have a business 
model, thanks to successive governments, that would make Al Capone blush.”

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