Persimmon cuts dividend as housing sales tumble
Persimmon cut its dividend and revealed it faced hundreds of millions of pounds in additional costs related to building safety, as higher mortgage costs cause a steep drop in housing sales.
Shares fell 8 per cent on Tuesday morning after the FTSE 100 company announced that it was scrapping its dividend policy in response to “increased uncertainty” and higher taxes.
Persimmon, one of the UK’s biggest housebuilders, said there were clear signs the housing market was slowing, revealing that the sales rate across its sites had fallen 20 per cent in the past six weeks while the number of buyers cancelling their home purchase had jumped by a third.
Millington said that while the increase was partly down to a tightening of government rules, “to move from £75mn to £350mn looks unusual — it suggests the work done before was not rigorous enough”.
Gove, recently reappointed to the housing role by Prime Minister Rishi Sunak, has taken a combative approach to the sector. Speaking in the House of Commons this week, he put developers on notice that a deteriorating economy was no excuse for not making good on their “obligation” to fix defective buildings.
“It cannot be the case that economic conditions that affect us all are being used by developers or anyone else to shuffle off their obligations,” he said.
This story originally appeared on: Financial Times - Author:George Hammond
