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Persimmon expects to treble NewBuy sales

Persimmon is calling for an extension to NewBuy which it expects to drive 13 per cent of its sales now rates are more attractive to customers.

NewBuy, which sees house builders and government underwrite mortgages to enable consumers to borrow with just a 5 per cent deposit, made up four per cent of private sales for 2012, but the house builder expects this to treble this year.

Persimmon chief executive Jeff Fairburn said: “It was a fairly slow take up in fairness.

“We are seeing 12-13 per cent of weekly sales coming through the NewBuy product, largely driven by the improvement in the mortgage rates. When initially introduced, rates were over 6 per cent, but are now sitting at around 4.5, certainly below 5 per cent.”

Mr Fairburn said he thinks it will continue “along the lines of 12-13 per cent”.

The NewBuy scheme, where Persimmon is partnered with lenders including Woolwich, Nationwide, NatWest, Santander and Halifax, is set to run until 2015, but Mr Fairburn said the industry will be lobbying for an extension.

Mr Fairburn said: “It’s a successful number but a bit less than what the government initially intended, so I think as an industry we are looking to convince the government to extend that scheme and make it go a bit further.”

The firm said lenders also appear to be embracing the government’s Funding for Lending scheme, with increasing use of this facility reducing their funding costs and leading to some recent reductions in mortgage rates.

The house builder has increased profits by half while revenues rose nearly £200m to £1.72 billion in 2012. Profit before tax climbed 52 per cent from £147.2m to £221.83m as operating margin grew to 13 per cent (11 per cent in 2011)

Persimmon confirmed it will release its first tranche of cash to shareholders as part of its plans to return £1.9bn, with a £227 million capital pay out, or 75 p per share, in June 2013.

The group is also looking to raise operating margin to between 15-17 per cent in the next three years, with a continued focus on family homes after the Charles Church brand saw a 28 per cent increase in revenue.

Persimmon saw 12 per cent growth in its northern division this year which Mr Fairburn said shows “we are seeing good interest right across the country”.

Mr Fairburn said they are “already seeing the benefits” of merging central division integrated into the respective north and south divisions, announced at the end of last year.

The changes also saw Persimmon appoint two strategic land directors to its southern and northern divisions at the start of the year, tasked with overseeing the delivery of strategic land through the planning process.

The primary focus of the group remains on strategic land – which is acquired without planning permission and taken through the process.

It said 38 per cent of new plots added in the sceond half of 2012 were from the strategic landbank.

Overall completions were up 9 per cent to 9,903 in the year.

The firm has made a strong start to 2013, with completions in the first eight weeks about 9 per cent ahead of 2012.

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