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Jeff Fairburn could cash in again after Avant Homes takeover

Hilary Osborne, Rupert Neate and Julia Kollewe
·5 min read
<span>Photograph: Bloomberg/Getty Images</span>
Photograph: Bloomberg/Getty Images

Jeff Fairburn is back. The former boss of housebuilder Persimmon exited stage left in 2018, after he and his proposed £110m bonus had become a lightning rod for public outrage over the outsized profits being made by developers exploiting government loans to buyers of new-build homes.

On Wednesday, the 54-year-old executive returned to the headlines, with the takeover of a developer based in the east Midlands.

In a deal funded by a US private equity fund, Avant Homes was acquired by Berkeley DeVeer, a Wetherby-based housebuilder in which Fairburn acquired a controlling stake in January last year.

A trawl through Land Registry records shows Berkeley DeVeer has been quietly buying up land across Fairburn’s old Persimmon stomping grounds in Yorkshire and the north-east since he joined the company. It has bought 11 plots – about 12 hectares (30 acres) of land.

The takeover puts Fairburn, who will chair Avant Homes, in a good position to make more out of the booming housing market: a day after news of the deal broke, official figures showed there had been double-digit house price growth in the parts of the country where both builders operate.

Jeff Fairburn will chair Avany Homes.
Jeff Fairburn will chair Avany Homes. Photograph: Persimmon/PA

And it has led to an accusation that he will be once more making that money as a direct result of government cash. Commenting on the deal, Clive Betts, chairman of the housing select committee, told the Times: “He seems to be able to walk from one job where he gets taxpayers’ money into another job where he gets taxpayers’ money.”

The discomfort at Fairburn’s return is understandable. His Persimmon bonus had been linked to the group’s share price, which rocketed thanks to the government help-to-buy programme, a scheme which loans purchase money to housebuyers. After the row erupted, it was cut to £75m and Fairburn promised to give a “substantial” amount to charity. The concessions were not enough to save his job: in November 2018 he was ousted, after the firm’s directors said the controversy was having a negative impact on the reputation of the business.

Several years and one pandemic later, Fairburn’s deals have positioned him to profit once more from government support for the housing market. A stamp duty holiday on the first £500,000 of the cost of a home in England and Northern Ireland is the most generous in the UK and expected to cost the Treasury £1.35bn this year in lost receipts.

The mortgage guarantee scheme launched this week is backed with £3.9bn of government cash, and this year the help-to-buy equity loan scheme is forecast to cost £4.1bn, with that money going straight into new-build house prices.

Neal Hudson, housing market analyst at consultancy BuiltPlace, said there was “some element of truth” in what Betts has said, but that it could be said about all developers.

“The housebuilding sector is very dependent on the equity loan scheme at the moment,” he said. “He’s a housebuilder. He’s benefiting from the fact that we have a highly financialised market at the moment and the market is very dependent on government support.”

Help to buy was relaunched in April, and is now available only to first-time buyers and has regional price caps in place. “Even so, it’s going to be a pretty significant part of the market for any housebuilder,” said Hudson.

In the last set of accounts from Berkeley DeVeer, changes to the scheme were high on a list of principal risks and uncertainties. “The group continues to enjoy support from the government from these schemes,” it said, adding it would monitor any changes closely “to ensure they can benefit in the future”.

The 95% mortgage guarantee launched this week offers no direct support, as lenders are currently shying away from offering the loans on new-build houses and flats. “But it does indirectly because it is very much sending out a message that the market isn’t going to crash,” said Hudson. “Prices will stay where they are, or go up, or at least the government will do its best to ensure that.”

In the Midlands and north where Avant Homes and Berkeley DeVeer operate, there is plenty to go for, said Anthony Codling, housing analyst and chief executive of consultancy Twindig. “It’s a less heated and a less competitive market. I would have thought you can get very good returns there.”

Changing lifestyles and the stamp duty holiday, which has been most generous and long-lasting in England and Northern Ireland, have lifted interest in family homes away from cities – Berkeley DeVeer’s speciality. The Blenheim Vale development in Leeds typifies its offering, with three- and four-bedroom detached and semi-detached homes on the market for up to £412,000.

Codling said if working from home becomes a long-term trend, the areas the builders cover could benefit from greater demand from buyers. “If there is a systemic shift, it could be a really good long-term call to be in the north and the Midlands,” he said.

Fairburn declined to comment on Betts’ statement, and the firm said it was able to use help to buy, in common with other builders.

Asked about the charitable donations that had been made so far by the ex-Persimmon boss, a spokesperson said he had set up a private trust through a donor advised fund and had made charitable contributions since 2018 and continued to do so, but these were a private matter for him and his family. The sums invested, and the charities that have benefited, remain undisclosed.