Persimmon reports higher customer satisfaction levels

Persimmon launched a review of its business practices in April
Persimmon launched a review of its business practices in April
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FTSE 100 housebuilder Persimmon said it is making good progress on improving customer satisfaction levels following a decision to slow down property sales in order to improve its quality and service.

The York-based firm said customer satisfaction is now above the 79 per cent level recorded at the last annual measurement date in 2018, which means it is now above the level required to reach the sector’s four-star rating.

CEO Dave Jenkinson said: “Generally the feedback is quite positive. What we are seeing is an improvement in our customer care satisfaction levels. Customer care is improving and we’re addressing any legacy issues.

“I’m really pleased with the results for the first six months. We’ve now got 65 per cent of our potential replies back in. I’m confident of the direction of travel.”

Persimmon reported a 1 per cent fall in pre-tax profit to £509m in the six months to June 30 as the number of new homes sold slowed to 7,584 compared with 8,072 this time last year as a result of the slower sales pace.

The group is keen to get over a public row over complaints about the quality of its homes.

It launched a review of its business practices in April and decided to push back the timing of handovers to ensure houses were checked more thoroughly.

Earlier this year, Persimmon announced it would be the first of the major UK housebuilders to introduce what the industry calls a “homebuyers’ retention”. Under the new scheme the homebuyer’s solicitor withholds 1.5 per cent of the total home value (an average of £3,600 per home) until any faults identified are resolved.

“I think this scheme is industry leading. It empowers the customers and gives them more control to ensure that the issues are going to be resolved in their house to their satisfaction,” said Mr Jenkinson.

Earlier this week, property website Rightmove said that August, normally a quiet month for the property market, has seen a surge in sales, possibly due to buyers seeking to conclude transactions before the country leaves the European Union on October 31.

Mr Jenkinson said: “We’ve been pleasantly pleased with the summer trading.

“We have seen a pick up in the South East division which is out of kilter with the rest of the country. We have seen a bit of a pick up as per the Rightmove report.”

Persimmon believes it is well placed if there is Brexit upheaval as it is enjoying high employment levels, low interest rates and its prices are at the more affordable end of the market.

“The group is in a good place,” said Mr Jenkinson.

“We’ve got a good product and a good range of sites with the right product at the right price throughout the country.

“80 per cent of our materials come from within the country and we’ve worked hard with our suppliers to future-proof that supply. We’re in a good position for Brexit.”

The company, which builds homes in more than 350 locations in the UK, has spent 40 per cent more this year to improve customer service.

The higher spending will lead to about £15m more in annual customer care costs.

Average selling prices of its homes in the first half rose to £216,942 from £215,813 a year earlier.

Analyst Sophie Lund-Yates at Hargreaves Lansdown said: “In normal circumstances a drop in completions and revenues would be a warning sign for a housebuilder, but while the blip to the top line might not make for pleasant reading, it’s actually good to see Persimmon applying the brakes.

"Following a flurry of customer dissatisfaction, it took the decision to temper the speed at which it released homes to market, in a bid to avoid a repeat performance."

Senior market analyst Fiona Cincotta at www.cityindex.co.uk said: "Persimmon's profits may have fallen, but the company is putting itself on a more solid foundation by investing extra in the quality of its homes.

"Complaints about poorly-built and leaky houses, coupled with stratospherically high pay packets for executives, had put Persimmon at risk of being excluded from Help to Buy.

"Management appears to be getting the balance better now between investing in customer service on one hand, and benefiting from the bonanza that is Help to Buy on the other."