Persimmon pledges to improve customer satisfaction

Profits at Persimmon have rocketed to more than £1bn, largely off the back of first-time home buyers and bolstered by Help to Buy equity loans. But the UK housebuilder’s future access to Help to Buy is at risk as the government reviews its Help to Buy contract. The Times reported that James Brokenshire has become “increasingly concerned” over Persimmon’s leasehold sales, build quality and leadership accountability. “The points that the government has raised in terms of customer satisfaction and improvements therein, we acknowledge and we are continuing to move forward and trying to improve performance on the back of that,” said Persimmon group finance director Mike Killoran. An MHCLG spokesman said: “This government wants to see more good quality homes that people are proud to buy and proud to live in. We expect all housing developers to deliver good quality housing, to deliver it on time, and to treat purchasers of new-build homes fairly. “Last October, we announced our intention for there to be a New Homes Ombudsman and we intend to introduce legislation to require developers of new-build homes to belong to this body.” Large investments Killoran said the housebuilder was making large investments into customer care resources, IT and digital tools. These tools seek to support site management and customer care teams, working to improve the accuracy of move-in dates and post service handovers. “From 2014 we have increased our customer care resource by over 93%, where legal completions have increased by 22%,” he said. “We are introducing a customer portal, hopefully by the end of this year, which will improve the interaction between ourselves and our customers and to address their needs more fully and more quickly.” The company has also hired new home inspectors and will use IT to help teams on site access information and balance responsibilities of site supervision and build quality. Much of this will be spearheaded by new chief executive Dave Jenkinson. “Dave is bringing in a different approach to the leadership of the business, with a broader view of the requirements and responsibilities that we have as a leading UK housebuilder,” said Killoran. Jenkinson has worked at Persimmon for 22 years and stepped into the interim chief executive role last November, following the departure of Jeff Fairburn after complaints about his £75m bonus. Persimmon has made clear that he will not receive a 2019 bonus and will not receive an award under the group’s 2017 share performance plan. Jenkinson will remain on his current salary until a review in January 2020, following shareholder consultation. “Going back to the customer focus, attributing a higher proportion of pay and incentives for senior management aligned with that sort of objective is important to make sure that everybody is aligned with those outcomes.” Reliance on Help to Buy The priority for 2019 is to maintain momentum while also delivering on these customer care satisfaction promises. But the business is also heavily reliant on Help to Buy, and lack of access to this initiative, be this via a 2021 government review or a 2023 end of the scheme, poses a large risk for the business. In 2018, 7,970 homes were purchased by customers under Help to Buy, making up 48% of the 16,449 homes delivered for the year. Killoran said: “We sell a lot of new homes to those customers that choose to use those types of mortgages, if Help to Buy wasn’t available for whatever reason then we would have to look to support customers gaining access to purchase in different ways. “We would hope that the performance of the business will make sure that we continue to participate within that scheme.” Persimmon’s dependence on the scheme has been seen as particularly controversial in light of high payouts and operating profit margins. The housebuilder boasts a profit margin of 30%, compared to around 20% for the likes of Barratt Homes. “The bulk of the outperformance there is supported by the landbank that we own and control. That is a very valuable asset to the business and is the principle reason why our margins are a bit higher than others in the sector,” said Killoran. With a new customer focus and company culture can Persimmon maintain this margin? Killoran said the company would continue to invest in its landbank to deliver new homes. “At the end of the day, the government is targeting an increase in output and we would like to support the delivery of those increases,” he said. To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette