Persimmon’s £1bn profits spark calls to end Help to Buy

The leader of the Liberal Democrats has called for the government’s Help to Buy scheme to be scrapped after one of Britain’s largest homebuilders announced pre-tax profits of more than £1bn.

Persimmon Homes announced yesterday (February 27) it made pre-tax profits of £1.09bn last year, up 13% on 2017 when it posted pre-tax profits of £0.9bn.

The latest set of the housebuilder’s financial figures show it built 16,449 homes last year with an average house price of £215,563.

The homebuilder hit the headlines last year after its former chief executive Jeff Fairburn received a bonus of £110m.

The new figures also show Persimmon built 7,970 new homes for customers who elected to use the government’s Help to Buy programme, which provides equity loans towards the cost of buying new-build homes.

Under the programme, the government lends up to 20% of the cost of a newly built property – or 40% within Greater London – so buyers need only a 5% deposit and a 75% mortgage to buy it.

The leader of the Liberal Democrats Vince Cable said ‘the fact that Persimmon’s profits have topped £1 billion at the taxpayer’s expense is a scandal’.

‘The Government must act to stop Help to Buy, rather than allowing big housebuilders to pinch their profits from the public purse,’ he added.

‘Far from benefiting first-time buyers, the major effect of Help to Buy is to drive up demand while having no effect on supply,’ said Mr Cable.

‘Prices go up and buyers are forced off the housing ladder. The result is not help for those who need it, but a boost to the profits of big developers.

‘Liberal Democrats have set out how government could be delivering 300,000 homes a year over the next decade, by creating a British Housing Company as a dedicated, not-for-profit body to build on land acquired compulsorily without profits from land scarcity.’

While Greg Beales, campaign director at 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,’ said Beales.

‘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.’

Persimmon’s chief executive, Dave Jenkinson, said the firm’s 2018 results reflect its ‘successful focus on offering attractively priced new homes primarily to the first-time buyer and first time mover markets’

‘This strategy has enabled Persimmon to grow its construction volumes by more than 75% since 2012, making a significant contribution to UK housing supply,’ added Mr Jenkinson.

‘My focus is to build on this strong platform, maintaining our operational momentum, but also implementing a number of necessary new initiatives in customer care. A wide range of projects to improve customer satisfaction commenced in late 2018 and the initial results have been encouraging, giving us confidence in our ability to make progress in this important area. We continue to invest in our teams, systems, and our off-site manufacturing capabilities to support the group’s further growth.’