Investment Case
Our markets - Growth in a challenging market
Housing supply: persistent challenges, planning policy
The UK continues to face a structural undersupply of housing, with population growth and the need to replace ageing stock intensifying the crisis. The Government’s commitment to deliver 1.5 million homes over this Parliament remains1 , but delivery is lagging: completions in England for the 12 months to September 2025 were well below the 300,000 required annually to meet the target. The Government has reaffirmed its pro-housebuilding stance, passing the Planning and Infrastructure Act in December 2025, and increased funding with £39bn2 pledged under the Affordable Housing Programme as part of the June Spending review. While encouraging, the sector awaits changes on the ground. For exapmle, the key measures of the Act still require enabling through secondary legislation.
Our response
We have proactively enhanced our planning approach over the past few years and secured approvals on 12,815 plots in 2025 — exceeding utilisation rates and demonstrating resilience despite policy uncertainty. Our engagement with policymakers remains robust, advocating for streamlined, sustainable development and faster planning decisions. We are leveraging our national land bank and strategic land pipeline to maintain delivery momentum, while closely monitoring evolving planning frameworks and environmental requirements. This allowed us to grow our outlet base during 2025, against industry trends, with further growth expected in 2026.
Government target for new home additions over this parliament1
1. www.gov.uk/government/news/planning-overhaul-to-reach-15-million-new-homes.
2. www.gov.uk/government/publications/delivering-a-decade-of-renewal-for-social-and-affordable-housing/.
Affordability and market trends: headwinds remain
In 2025, the UK economy continued its recovery, with real GDP growth estimated at 1.3%. Although inflation has eased, it continued to exceed the Bank of England’s target, which has dampened the pace of rate cuts impacting affordability, particularly for first-time buyers. Nevertheless, wage growth has outstripped house price inflation, and mortgage rates have declined — with the average two-year fixed rate at 4.86%1 in December 2025. Meanwhile, despite a pause on investment in the lead up to the Budget, total institutional investment in Build to Rent (’BTR’) schemes totalled a record c.£5.3bn in 20252. 59% of this was for single family housing, continuing the trend seen in 2023 and 2024.
While the Autumn Budget contained little direct impact on housebuilders, the introduction of a mansion tax for properties over £2m from April 2027, adjustments to pension salary sacrifice, new pay-per-mile charges for electric vehicles, higher taxes on rental income, frozen income tax thresholds and a consultation on ending Lifetime ISAs could have an impact on the wider housing market.
Our response
We continue to offer a broad range of homes at accessible price points, with our core private average selling price below the national average. During 2025, we also launched two new products, New Build Boost and Rezide to help our customers bridge the affordability gap with an interest-free loan of 15% of the purchase price. Our diversified brand portfolio — spanning our core Persimmon brand, the premium market through Charles Church, and the BTR/affordable institutional markets through Westbury — enables us to adapt to regional market dynamics. Strategic partnerships in the private rental and affordable housing sectors underpin our resilience and growth, while our national footprint provides a buffer against regional volatility.
1. www.moneyfactsgroup.co.uk/media-centre/group/lenders-slash-rates-and-improve-choice-for-borrowers/ .
2. Savills UK Build to Rent Market update.
Labour and build cost pressures: benefiting from vertical integration
Labour shortages, an ageing workforce and persistent skills gaps continue to constrain productivity and inflate build costs nationally. While build cost inflation was at a more normal c.2%-3% in 2025, the impact on projects acquired in previous years remains. The sector’s focus on apprenticeships and graduate programmes is growing, but as the industry returns back to previous peak volumes, supply may be constrained. In addition, the 2025 Budget introduced a sharp increase in landfill taxes (with the lower rate for inert materials such as topsoil, doubling from April 2026, and further rises expected in future years) adding further regulatory cost pressure to developers.
trainee and apprentices within the business
supply chain jobs supported
Our response
We are mitigating supply chain and cost challenges through robust supplier agreements and investment in vertical integration. Our apprenticeship and educational partnerships are expanding, with over 520 trainees and apprentices currently in training and c.96,000 supply chain jobs supported. We continue to invest in our factories as we look to increase productivity as well as increase off-site manufacture. During 2025, we installed a new semi-automated timber frame line and were the first developer to install an automated roof truss line, both at our existing Space4 timber frame factory. We also continue to pilot innovative construction methods, including with a brick facade system. As we increase the use of timber frames and continue to find innovative solutions, this will drive efficiency and address longer-term skill shortages.
Regulatory shifts: adapting to a changing landscape
The regulatory environment remains changeable. The Government’s planning reforms aim to reinstate local housing targets and streamline approvals, but implementation timelines remain uncertain. The Future Homes Standard (’FHS’), targeting net zero-ready homes, is still to be finalised and a date set for implementation. The Building Safety Levy, designed to fund remediation of unsafe cladding, will be introduced in Autumn 2026.
The Competition and Markets Authority (’CMA’) closed its investigation into housebuilding in October 2025, with the sector committing to enhanced compliance, transparency and a £100m contribution to affordable housing (of which Persimmon contributed £15.2m)1 .
Our response
We are actively preparing for regulatory change, with energy transition plans in place for all developments and early adoption of low-carbon heating solutions such as air source heat pumps. Our compliance and training programmes are being enhanced in line with CMA commitments, and we are working closely with industry bodies to shape best practice on information exchange and competition.
Low-carbon heating solutions installed instead of gas boilers
1. www.gov.uk/government/news/affordable-housing-set-to-benefit-from-100-million-following-cma-probe .
