A press report at the weekend suggesting Persimmon (PSN) might lose the right to sell homes through the Help to Buy scheme is putting the housebuilder’s shares under big pressure this morning, down 5.7% to £23.28.
Housebuilders only sell under Help to Buy, recently extended out to 2021, thanks to Government contracts and these are up for review.
Housing minister James Brokenshire is reportedly concerned about the running of Persimmon - which attracted severe criticism for a £75m pay award enjoyed by former chief executive Jeff Fairburn.
Brokenshire is also apparently unhappy about the build quality of Persimmon’s homes and the practice of selling properties lumbered with rising leasehold charges which makes them tricky to sell on.
The speculation is putting the rest of the sector under pressure, with Taylor Wimpey (TW.) falling 2.5% to 163.5p and Barratt Developments (BDEV) down 1.9% to 564.2p.
It will be interesting to see how Persimmon addresses the rumours when it reports full year results tomorrow.
A ‘POISONED LEGACY’
AJ Bell investment director Russ Mould says: ‘The poisoned legacy of the frankly astonishing £75m pay award to its former chief executive Jeff Fairburn continues to haunt housebuilder Persimmon if weekend press reports are any guide.
‘This shows the importance of paying more than lip service to good governance and corporate social responsibility. These things really matter and can have a significant impact on the success or failure of a company over the longer term.
‘It also demonstrates the risks of being overly reliant on Government support which can then be unilaterally withdrawn.’
