Help To Buy builder hits £1billion profit jackpot

Taxpayer subsidy drives recordbreaking year for Persimmon

PERSIMMON is set to become the first housebuilder in Britain to rake in profits of more than £1bn in a year.

The FTSE 100 firm made around £1.1bn in 2018 as it cashed in on the taxpayerfunded Help To Buy scheme.

That is up from £966m the previous year and comes after sales reached £3.5bn. The bumper results fuelled anger that a taxpayer subsidy has left the industry awash with cash when many families are struggling to get on the housing ladder.

Persimmon has been fiercely criticised for making massive payouts to executives and faced criticism over shoddy workmanship and poor-quality homes.

Former boss Jeff Fairburn was ousted over his ‘obscene’ bonus that at one stage was worth £131m. The windfall, paid in Persimmon shares, was cut to around £75m before Fairburn, 52, left after a backlash from investors.

His replacement, managing director Dave Jenkinson (pictured below), was handed shares worth £40m in the same scheme.

Jenkinson, 51, yesterday said profits would be ‘modestly ahead’ of the £1.07bn expected by analysts as it benefited from low interest rates, cheap mortgages and high employment.

But critics claim the industry has been propped up by Help To Buy, the scheme which since 2013 has offered families loans from the taxpayer when they buy a newbuild home. Nearly half of the 16,449 homes Persimmon sold last year were through Help to Buy.

greg Beales, campaigns director at shelter, said: ‘Help To Buy has done more harm than good. It has inflated house prices and boosted big developers’ profit margins while doing very little to help those most in need of a genuinely affordable home.

‘The only way to provide millions with the chance of a stable, low-cost home is to build a new generation of social housing.’

Housing campaign group Priced out said: ‘Huge profits have been achieved off the back of government’s terrible scheme. They are literally investing public money in rising house prices.

‘This money – tens of billions of pounds – could have been used to build affordable housing, but simply lines the pockets of developers and pushes house prices further out of the reach of ordinary people.’ Persimmon now has around £700m in the bank to spend, helping to protect it from uncertainty surrounding Brexit. Jenkinson, the interim chief executive, said: ‘The housing market in 2018 has proved to be very resilient and has continued to benefit from robust employment levels, low interest rates and a competitive mortgage market.

‘This has supported confidence and sustained demand. However, we are not complacent. We have plans in place to meet whatever shape the demand is in 2019.’

The average selling price of a Persimmon home rose 1pc to £215,560 last year, with the firm making a profit of around £67,000 on each. The company will look at a bumper dividend. Jenkinson told analysts: ‘The cash position gives us options. We always review this at the February board meeting, and we’ll come back and update you on what we think we’re going to do.’

Help To Buy has been extended to 2023. Figures show thousands of wealthy families are taking advantage of it, though it is aimed at struggling first-time buyers.

The profit news failed to lift Persimmon shares, however. The stock fell 1.3pc, or 28p, to 2201p.