While trading has remained on track despite Brexit, the impact of a flawed remuneration scheme has dominated the headlines for months and York-based Persimmon has become the poster child for excessive executive pay.
Add in a rising tide of customer complaints and a lumping together of the company with other housebuilders implicated in the leaseholds scandal, and it’s been a year to forget.
To cap it all, there is a recent report that ministers are considering throwing Persimmon out of Help to Buy, the Government-backed scheme to help first time buyers on to the housing ladder. Half of the 16,449 new homes that Persimmon sold in 2018 were funded by the scheme.
You don’t have to be a PR genius to conclude that Persimmon’s reputation needs an urgent reboot.
However, the appointment of new chairman Roger Devlin looks like it has been the catalyst for change. Firstly, former CEO – and chief bonus recipient - Jeff Fairburn was shown the door. Secondly, at last month’s annual results there was a significant change in tone with Persimmon admitting that its customer care standards weren’t good enough.
While Persimmon’s customer care score has improved over the last few years, it’s still stuck at 79 per cent, just below the level required to match the four-star rating enjoyed on average by its industry peers. The company clearly has work to do.
CEO Dave Jenkinson appears to have taken up the challenge with vigour and Persimmon seems to be getting to grips with the issue.
A brace of new customer care measures and investments have been announced. Persimmon will delay sales release on some sites until a more advanced stage of build had been reached to give greater certainty over moving-in dates – addressing one of the major sources of customer dissatisfaction. Mr Jenkinson told analysts that, given enough time to take effect, he was confident that these measures would make Persimmon a four-star builder.
Last Thursday Persimmon surprised the market by announcing 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.
It is a structure that’s common in the commercial sector. With annual volumes of around 16,500 new homes, Persimmon now has a £60m incentive to resolve faults quickly.
Retention is an idea that’s been mooted in the past, but has always been resisted by the industry in the UK, so Persimmon does seem to be making a genuine effort to innovate and improve.
Some might say that the big developers shouldn’t need an extra financial incentive to deliver new homes of acceptable quality to their customers – and they would have a point. However, any measure that puts control back into the hands of the customer and encourages the big builders to do better has to be welcomed. It will be interesting to see if any of Persimmon’s competitors follow suit.
Mr Devlin and Mr Jenkinson have shown they are serious about changing the culture at Persimmon and repairing damaged relationships with customers and Government. They are to be applauded for that and shareholders will be hoping that the company can now finally begin to put the traumas of the last 18 months behind it.