Persimmon warns on election holding up housebuilding

The chief executive of Persimmon has warned that the election is making it more difficult for UK housebuilders to secure planning permission for sites, stalling development.

"In line with past experience, it has become increasingly difficult to secure planning consent for sites as May's general election approaches," said Jeff Fairburn ahead of the company's annual meeting at York racecourse on Thursday.

"While we would expect such delays to be short term in nature, they are hindering the expansion in the number of active outlets required by the housebuilding industry to support an increase in the volume of newly built homes delivered to the market."

The UK's housing shortage was thrown into the media spotlight this week after Conservatives led the launch of their election manifesto with a pledge to boost "Right to Buy" home ownership. The prospect of increased sales of limited stocks of cheaper rented homes was not universally welcomed.

Uncertainty over gaining planning permission is also regularly highlighted by executives across the British housing sector as a big barrier to alleviating the supply shortage. However, the remarks by Mr Fairburn came as the FTSE 100 group flagged an encouraging start to the 2015 financial year, boosted by government schemes such as Help to Buy and an improving UK economy and mortgage market.

However, Robin Hardy, analyst at Shore Capital, said that although Mr Fairburn's comment had "upset the market, this was Persimmon playing to the gallery".

Mr Hardy added that Persimmon and the other housebuilders did not seem to be suffering any material impact from planning delays, with 85 of 120 targeted sites for 2015 already opened and the group restating confidence that the planned increase from 375 to 400 active sites will be achieved by midyear.

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Persimmon said forward sales were 7 per cent higher in the first 15 weeks of 2015 than in 2014 at £2bn. The weekly private sales rate per site this year is 6 per cent ahead of the same period last year, and the average selling price for new homes sold forward into the private sale market was 4 per cent higher, at £207,900.

The company's first-quarter update continues the momentum from 2014. In February, Persimmon reported a better than expected 44 per cent pre-tax profit of £475m for the financial year to December 31 and brought forward a dividend payment of 95 pence a share to April 2 from July 2.

It added that it had taken on more than 80 trainees who had left the armed forces and would recruit another 300 veterans over the coming year. The industry faces severe skills shortages, which have driven up wages, in particular for bricklayers.

Persimmon's share price slipped 1.4 per cent during morning trading in London to 1,735p, short of the record close it achieved on Monday. The stock is up 11.53 per cent this year, which sees it lagging behind the 13.76 per cent return for the Bloomberg UK Homebuilder index, and bigger individual gains for rivals such as Taylor Wimpey, which is up 20.10 per cent, Barratt Developments, which has gained 15.29 per cent and Bovis Homes Group, which has risen 12.44 per cent.

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