Persimmon may lose Help to Buy contract after criticism

PERSIMMON, Britain’s second-largest house-builder, faces losing its Help to Buy contract following claims of “poor standards and hidden charges”, it was reported last night.

Its involvement in the government initiative, which accounted for half of the homes built last year by the FTSE 100 giant, is reportedly under review by James Brokenshire, the Housing Secretary.

The scheme, which aims to help first-time buyers and those looking to move home, was launched in 2013 and has helped Persimmon to almost triple its profit per house, from £22,114 in 2012 to £60,219 last year.

The review, reported in The Times, comes as Persimmon is poised to be the first house-builder to report profits of more than £1bn.

In January, the company said its pretax profits would exceed the £1.09bn pencilled in by analysts after it made better-than-expected margins on new land.

The York-based house-builder faced a huge backlash at the end of last year amid criticism over executive pay.

Jeff Fairburn, the former chief executive, refused to hand back a chunk of the £75m he was given through the company’s long-term incentive plan established in 2012.

The scheme, set up after 2,000 of Persimmon’s 5,000 workers had been made redundant, was not capped. This meant that as demand for Persimmon’s homes increased, so did payouts to executives. Persimmon’s scheme proved particularly controversial because its selling price is slightly lower than its peers, meaning it has benefited more from the Help to Buy scheme.

Dave Jenkinson, who has been running the business on a temporary basis since December, said he hoped the company could “move forward”, although he too benefited from the bonus share scheme that cost Mr Fairburn his job.