Jeff Fairburn is back. Former home builder boss Persimmon left the stage in 2018 after he and his proposed £ 110m bonus became a lightning rod for public outrage over the oversized profits made by developers using government loans to new home buyers.
The 54-year-old manager made headlines on Wednesday with the acquisition of an East Midlands developer.
In a deal financed by a US private equity fund, Avant Homes was acquired by Berkeley DeVeer, a Wetherby-based home builder, in which Fairburn acquired a majority stake last January.
A search of the land records reveals that Berkeley DeVeer has tacitly bought land on Fairburn’s old Persimmon rammed earth in Yorkshire and the North East since joining the company. It has bought 11 lots – about 12 acres of land.
The takeover puts Fairburn, who will chair Avant Homes, in a good position to get more out of the booming property market: A day after the deal was announced, official figures showed that parts of Avant Homes were seeing double-digit growth in property prices recorded was the country in which both builders are active.
Jeff Fairburn will chair Avany Homes. Photo: Persimmon / PA
And it has led to the allegation that he will be making that money again as a direct result of government money. Commenting on the deal, Clive Betts, Chair of the Housing Select Committee, said: “He appears to be able to move from one job where he receives taxpayers’ money to another where he does Taxpayer receives. “
The discomfort at Fairburn’s return is understandable. His Persimmon Bonus was tied to the group’s share price, which skyrocketed thanks to the government’s purchase aid program, which provided loans to home buyers. After the series broke out, it was cut to £ 75 million and Fairburn pledged to donate a “substantial” amount to charity. The concessions weren’t enough to save his job: he was fired in November 2018 after the company’s directors said the controversy had negatively impacted the company’s reputation.
A few years and a pandemic later, Fairburn’s deals led him to reap the benefits of government support for the property market. A stamp duty vacation on the first £ 500,000 of home costs in England and Northern Ireland is the most generous in the UK and is expected to cost the Treasury Department £ 1.35 billion in lost revenue this year.
The mortgage guarantee system launched this week is backed by £ 3.9 billion in government funds and this year the equity loan purchase system is expected to cost £ 4.1 billion, with that money going straight into new home prices .
Neal Hudson, real estate analyst with consulting firm BuiltPlace, said that what Betts said contains “an element of truth” that can, however, be said about all developers.
“The housing sector is currently heavily reliant on equity loans,” he said. “He’s a house builder. It benefits from the fact that we currently have a highly funded market and the market is heavily dependent on government support. “
Buying assistance was restarted in April and is now only available to first-time buyers. Regional price caps apply. “Even so, it’s going to be a pretty significant slice of the market for any home builder,” said Hudson.
In the recent Berkeley DeVeer accounts, changes to the system were high on the list of major risks and uncertainties. “The group continues to receive government support in these programs,” she said, adding that it would closely monitor any changes “to ensure they can benefit from them in the future.”
The 95% mortgage guarantee launched this week does not offer any direct support as lenders are currently reluctant to offer new home and home loans. “But it is doing indirectly because it sends a lot of a message that the market is not going to collapse,” said Hudson. “Prices will stay where they are or go up, or at least the government will do its best to make sure they do.”
There’s plenty to do in the Midlands and the north, where Avant Homes and Berkeley DeVeer operate, said Anthony Codling, real estate analyst and general manager of consulting firm Twindig. “It’s a less heated and less competitive market. I would have thought you could get very good returns there. “
Changing lifestyles and the most generous and long-lasting stamp duty leave in England and Northern Ireland have sparked interest in family homes outside of the cities – Berkeley DeVeer’s specialty. The Blenheim Vale project in Leeds is a case in point of what it has to offer: three and four bedroom detached and semi-detached houses on the market for up to £ 412,000.
Codling said if working from home becomes a long-term trend, the areas that home builders cover could benefit from greater demand from buyers. “If there is a systemic shift, being in the North and the Midlands could be a really good long-term call,” he said.
Fairburn declined to comment on Betts’ testimony, and the company said it could work with other builders to use help with the purchase.
When asked about the donations the ex-Persimmon boss had made so far, a spokesman said he had set up a private foundation through a fund advised by donors and had been making charitable donations since 2018, a private matter for him and his family. The amounts invested and the charities that benefited from them will not be disclosed.