The spotlight shone on the housebuilding sector today as Berkeley (BKG) announced a robust set of full year results and Persimmon (PSN) struck a deal with the CMA (Competition and Markets Authority) over leasehold properties. Shares in Berkeley were down 1% to £45.93 while Persimmon dipped 0.9% to £30.

For the year ended 30 April 2021, Berkeley’s pre-tax profit rose to £518.1 million from £503.7 million year-on-year as revenue climbed to £2.2 billion from £1.9 billion.

The company sold 2,825 homes, up from 2,723 last year, at an average selling price of £770,000, up from £677,000.

The gross margin percentage decreased to 28.8% from 33.2%, reflecting the mix of properties sold in the year, the operating environment over the last 12 months and investments.

Looking ahead, the company said fundamentals of Berkeley's core markets in London and the South East remain strong, driven by an undersupply of housing.

Commenting on the numbers Canaccord Genuity analyst Aynsley Lammin said: ‘Consensus is unlikely to see a material change today but the results and outlook comments are all very robust and reassuring.

‘The group looks well set to deliver its significant step up in completion delivery to 2024/25 and continue to provide exceptional visibility on profit guidance and capital returns.’

PERSIMMON STRIKES CMA AGREEMENT

Persimmon’s deal with the CMA will see it limit the price of freeholds to £2,000 until the end of 2026. The company also had told the regulator it would reimburse leaseholders who paid more than £2,000 for their freeholds.

The moves came after the CMA investigated the practice of builders selling leasehold properties, which saw purchasers left with escalating ground rents and difficulties in selling properties.

Persimmon stopped selling leasehold houses in 2017, other than in exceptional cases, and also introduced a right-to-buy scheme enabling customers with leasehold houses to buy their freehold at a price below market value.

‘The informal voluntary undertakings agreed today largely extend existing schemes Persimmon has in place and have been made without any admission of wrongdoing or liability,’ the company said.

Persimmon’s agreement with the CMA will increase the pressure on the other housebuilders which the CMA is investigating – Taylor Wimpey (TW.), Countryside Properties (CSP) and Barratt Developments (BDEV).

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Issue Date: 23 Jun 2021