Persimmon has work to do to ensure its home buyers are as happy as its shareholders

Demand for housing in Britain remains strong despite the interruptions to the market caused by the pandemic.

This has left builders like Persimmon sitting very pretty. The group demonstrated that by announcing a second interim dividend of 70p,  just a day after rival Taylor Wimpey had made its investors smile.

Despite this largesse, Persimmon’s investors reacted rather sniffily and the company was excluded from a second day of market-wide vaccine-related share price gains. AJ Bell’s Russ Mould, however, pointed out that the company’s stock had been run up by around 17 per cent in the prior week. The shares were even up on the year to date, a vanishingly rare achievement in this market.

William Ryder at Hargreaves Lansdown highlighted the company's relative caution compared to peers and said the positive Covid vaccine news may have persuaded some investors to chance their arms with the sector’s riskier players. Perhaps investors were just looking for excuses to take profits.

All the same, this is a company in a very strong position. The shareholders who stayed on board will be rewarded. Customers? Well that’s where things get a little sticky.

Persimmon has had a nasty habit of generating negative headlines and negative feedback.

Perhaps the most infamous was the garage that wasn’t big enough to fit a car in. That was a few years ago now, but the dawn of 2020 saw a troublingly familiar tabloid headline.  

“Family's dream home becomes living nightmare after their £309,000 Persimmon property still has scores of faults,” said the Daily Mail. There have been too many like that.

The company says it’s addressing the issue. It touted an 89.8 per cent customer satisfaction score for the period from 1 October 2019 and said it has been trending ahead of the National Federation of Builders’ “five star” threshold since January 2020. It wasn’t so long ago that it was languishing down at three.

But the problem isn’t hard to see. If you turn that figure around, what it tells you is that one in every 10 people who buy a Persimmon home are dissatisfied. Perhaps getting five stars is a tad too easy.

When you consider that a home is the biggest and most important purchase a person will make, builders should be doing better. A satisfaction rate of less than 90 per cent really isn’t something this or any other company should be trying to boast about.

Persimmon has been keen to tout the work it says it’s been doing to address this, such as its “homebuyer retention scheme”, which allows 1.5 per cent of a home’s purchase price to be held back by the buyer’s solicitor at the time of handing over the keys, to cover any faults found in the first week.

While the offer feels more conditional than it ought to be – if Persimmon was really confident about the improvements in build quality, the scheme ought to be good for longer than a week – it has apparently proved quite popular.

But having been kept fat by the government’s Help to Buy scheme, which has done more to help prices than people, it’s hard to escape the impression that Persimmon and other developers have had it far too easy.

That scheme helped fuel the unconscionable bonuses that made new CEO  Dean Finch’s predecessor but one, Jeff Fairburn, the poster child for corporate greed in Britain.

While improvements may have been made, he still has work to do if the experience of his customers is to match that of his investors.