Shared equity schemes help Persimmon to beat home sales blues

SHARED equity and part exchange schemes are helping housebuilder Persimmon grow sales this summer despite a “challenging” market.

The UK’s second-biggest home builder said yesterday that weekly sales were up 4 per cent since the end of June while its order book is now 10 per cent ahead of last year at £1 billion.

The upbeat note on current trading came as the group reported a dip in sales and revenues in the first half of this year, although underlying pre-tax profit jumped 52 per cent to £59.7 million thanks to a reduction in finance charges as the firm reduced its borrowing.

Jeff Fairburn, managing director of the firm’s northern division – which includes Scotland – said he had noticed a return of first-time buyers in recent weeks. He said a slight easing in bank lending, with more mortgages now being offered on a 80 per cent loan-to-value basis rather than 75 per cent, and a number of shared equity schemes such as the “FirstBuy” scheme backed by the UK government, were helping more people get on the housing ladder.

He said: “Shared equity and part exchanges are a big incentive. We’ve got a very strong balance sheet with very low borrowings and we can support that shared equity provision.

Persimmon picked up about 20 per cent of a total pot of £35m under the FirstBuy scheme, in which the government and the developer each contribute 10 per cent of the equity on a home. It said that will help about 2,100 people to buy its homes.

The Scottish Government has funding in place to launch a similar scheme.

Fairburn said FirstBuy was supported across the industry, but Persimmon was hoping to do especially well from it.

“We’re quite pleased that we’ve got the capacity to do higher volume and that should support our market share,” he added.

He said the company was already seeing the first redemptions from its earliest shared equity sales, and it was re-investing the money.

York-based Persimmon, whose brands include Charles Church and Westbury, sold 4,439 homes in the six months to 30 June, down from 4,657 the previous year.

Average house prices also dropped nearly 4 per cent to £162,647, but it said the figure should improve due to a mix of larger houses being sold going forward.

Revenues fell from £776.6m to £712.8m, but the company slashed its borrowing to £15.2m, from £122.1m on 30 June 2010.

Persimmon upped its interim dividend by a third to 4p per share, to reflect “the improved underlying profitability of the business”.