Persimmon shares hit by reports government may ban housebuilder from Help to Buy scheme

“This would be a big blow given that more than 50% of its private sales are Help to Buy,” said Neil Wilson, chief market analyst at Markets.com.

Persimmon is expected to post strong full year results tomorrow

Persimmon PLC (LON:PSN) shares turned south on Monday following weekend reports that it could be stripped of its right to participate in the government’s Help to Buy scheme.

The government is considering banning Persimmon from the scheme amid complaints about the quality of the company’s homes and leasehold charges attached to new homes, according to The Times.

READ: Persimmon expects 2018 profits to be modestly ahead of market consensus, thanks to new developments

“This would be a big blow given that more than 50% of its private sales are Help to Buy,” said Neil Wilson, chief market analyst at Markets.com.

“This scheme has been central to Persimmon's recovery last year as the company is expected to report solid full-year results tomorrow, ahead of market expectations.

“However, house builders all looking to wean themselves off the Help to Buy drug ahead of the scheme's planned finish in 2023, Persimmon is not entirely out on a limb.”

Persimmon recently came under fire for the bonus paid to former chief executive Jeff Fairburn. Fairburn was originally awarded a nine-figure bonus but this was reduced to £75mln after the group received criticism from shareholders and the public.

READ: Persimmon boss Jeff Fairburn asked to leave after backlash over pay

Following the row, Persimmon said in November that it had asked Fairburn to resign as it believed the “distraction” around this pay continued to have a “negative impact on the reputation of the business”.

In January, Persimmon said it expects to 2018 pre-tax profit to be modestly ahead of the market consensus forecast.

Shares fell 5.3% to 2,335p in morning trading.

Quick facts: Persimmon

Price: 2478 GBX

Market: LSE
Market Cap: £7.9 billion

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