Home building juggernauts, Persimmon, are being placed under the governmental microscope and could lose their right to sell Help to Buy homes when their current contract expires in 2021.
Concerned by a myriad of recent decisions and activity by the company, a source close to James Brokenshire has suggested that he is becoming increasingly disillusioned with the company’s practices.
Persimmon came under increased scrutiny last year following a substantial pay out of £75 million to its former chief executive officer, Jeff Fairburn.
In September 2018, Persimmon were also amongst the home builders criticised for mis-selling leasehold homes.
As the government strives to fight for the rights of leaseholders in the UK, it is claimed that the government will begin to distance themselves from building companies that continue to use leasehold practices with new homes.
Whilst 2018 saw Persimmon’s collective revenue increase by 4% to £3.74 billion and their housing revenue also increase by 4% to £3.55 billion, losing such a lucrative government contract could be extremely concerning.
The fact that the company’s pre-tax profits for the opening half of 2018 increased by 13% from £457 million to £516 million highlight the importance of Help to Buy to their continued success.
A source close to the secretary of Housing, Communities and Local Government, James Brokenshire, said: “James has become increasingly concerned by the behaviour of Persimmon in the last 12 months.
“Leasehold, build quality, their leadership seemingly not getting they’re accountable to their customers, are all points that have been raised by the secretary of state privately.
“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.”
What will the potential exclusion of Persimmon homes from the Help to Buy scheme mean for available Help to Buy stock?
