Time to celebrate for York home builders
Yorkshire-based house builder Persimmon celebrates its 40th anniversary this year. Sharon Dale talks to group chief executive Mike Farley.
SET against the backdrop of recession and a mortgage squeeze you may wonder why Persimmon Homes is about to pop the champagne corks for its 40th birthday in September.
It’s not middle-age madness, just plenty of reasons to celebrate.
The credit crunch and economic slump finished off many developers, so the fact the York-based business has survived is reason enough to rejoice and what’s more there are signs that it is starting to thrive once more.
Persimmon Homes enjoyed a strong start to 2012. Spring saw 10 per cent more visitors to the sites and sales were up nine per cent year on year.
The company is virtually debt free and profitability is rising, as is recruitment.
Founded in York in 1972 by life president Duncan Davidson, it has also retained its status as one of the largest and most successful house builders in the UK with north, south and central divisions completing about 10,000 properties a year. Over the last 40 years it has built 200,000 homes.
The firm is a seasoned veteran of recessions, though none have been as long or severe as this, and the man who has guided it through the dark days is Mike Farley, group chief executive since 2006.
Mike, 58, who joined Persimmon in 1982, says: “This is the worst recession we have experienced by far and it is still a very difficult market out there. Luckily we responded quickly right at the beginning and that’s why we have weathered the storm. The market fell way in 2008 and we made some tough decisions very early on. We closed some of our offices, we didn’t start new sites, we slowed down the land buying and we reduced the workforce by half.
“It was all about cash conservation. We had debt in 2008 of £1.2bn and now we are virtually debt-free.”
Mike, a carpenter’s son from London, took a hands-on approach and still spends a great deal of time travelling the country visiting building sites.
“I deal with the figures and the numbers but I like to see what’s happening on the ground. That’s where the action is.”
Things have changed a lot since he started working life as a site engineer in the 1970s.
Planning issues are much more complex, he says, and sales and marketing is far more customer focussed.
“We used to sell from a portable building back then and now you have to have a show house and you help people organise mortgages.”
He also recalls that even in the early 80s, central heating was an optional extra for most properties. Now it is essential, as are en-suites and open plan living spaces.
What hasn’t changed, he believes, is a preference for traditional architecture and design.
“Most buyers want a traditional detached house with a garage at the side,” he says, adding that in the boom they weren’t always able to provide that. Planning rules insisted on high-density townhouses on many sites.
“We were made to build townhouses back then but things are changing and I am pleased to see that in the new National Planning Policy Framework there is a presumption in favour of development. As a nation we are not building enough houses. We built 110,000 last year but we needed 240,000.”
All new builds have to be more energy efficient and meet the government’s code for sustainable homes. Persimmon uses conventional brick and block construction, but a third of its homes are built with closed panel timber frames, which are prefabricated then clad with brick or stone on site.
Use of this Space 4 system looks set to increase as pressure for draught-free, highly insulated buildings increases.
Sales too look set to rise, though steadily, says Mike, who is predicting overall growth for the new-build sector.
“It will be modest over the next two or three years and that’s fine. We don’t want another boom and we have to make sure affordability is right, though I think there will be some price growth due to the shortage of housing.”
Persimmon aims to make a sizeable dent in that. It has 60,000 plots in its trademark safe, suburban areas, which will keep it going for six to eight years, and it is steadily acquiring more for its land bank.
It is part of a ten year action plan to take the firm to its 50th anniversary. There is also a pledge to return £1.9bn of surplus capital to shareholders through dividend payments over the next decade.
The decision followed Persimmon’s forecast that it will celebrate 2022 with higher sales and enhanced margins.
“The plan is that Persimmon will be bigger, better and will stick to its core value of building family homes,” says Mike.
Charities could benefit from a competition launched to mark Persimmon Homes’ 40th birthday. One UK charity will win a detached house worth £250,000. There are 23 runners up prizes of £6,000. Visit www. persimmonhomes.com/40. The winner will be announced in September.
ATTENTION TO DETAIL: The once-derelict farmhouse has had a stunning makeover and is now a luxurious family home with period features.
TURBULENT TIMES: Mike Farley has helped guide Persimmon through the recession, making tough decisions early on when the market fell.