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Smaller housebuilders could sell up as finance bites, says Persimmon MD

Persimmon’s managing director Jeff Fairburn has told CN that there could be acquisitions in the sector as smaller housebuilders are affected by a lack of commercial and mortgage finance.

Mr Fairburn was speaking after the volume builder announced it had bought South-east housebuilder Hillreed Homes for £35.7 million on Monday.

However, that deal was part of a retirement plan for the owners of the long-established premium Hillreed brand.

“Finance is a key constraint for smaller businesses, not just in housebuilding,” he said.

“And some companies are finding it very difficult to move forward in this climate.

“There may well be others who look at opportunities to sell, depending on the circumstances.”

For its part, Persimmon is always looking for land acquisitions, Mr Fairburn said.

“If this type of opportunity presents itself, then we would be interested in the right location, for the right types of sites,” he added.

The Hillreed deal provides 3,400 plots in Kent, including strong strategic land holdings.

But it also means Persimmon does not have to wait while changes to the planning system are established through the National Planning Policy Framework.

“The acquisition forms part of our land acquisition strategy really,” he told CN.

“Obviously there’s the new planning regime through the NPPF; however, that’s still bedding in and there is still a way to go with that before it becomes clear exactly how the system is going to work.

“So in the meantime, this provides us with some sites that have planning permission, and we can get on and build houses straight away.”

Persimmon inherits 25 office staff and 50 site staff as a result of the Hillreed purchase, after negotiations that were “on the go for a short while”.

The housebuilder intends to retain the local labour force already working on site, but will “use the strength of the larger Persimmon group in areas such as procurement where possible”.

The acquisition also gives Persimmon an established brand in Kent, where the premium builder Hillreed has been operating since 1973.

Persimmon said the takeover complements the existing Charles Church and Westbury Partnerships brands.

The MD said Persimmon intends to keep the Hillreed brand and will “obviously review the business as we go forward”.

“From what we have seen it’s a very well-run business and and we are keen to take it forward,” he added.

“We are going to utilise the Hillreed name, which is a quality name.”

Persimmon said in August that its total owned and controlled plots amounted to 63,786 (2011: 62,364). It also reported a 65 per cent hike in profits for the first half of 2012.

Mr Fairburn said the acquisition has no impact on plans to return £1.9 billion of surplus capital to shareholders over the next nine years.

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