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Persimmon admits blocking home buyer incentives for refusal to use tied broker

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  • 20/03/2018
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Persimmon admits blocking home buyer incentives for refusal to use tied broker
Persimmon has admitted it does not allow property buyers to enjoy its incentives if they do not use the builder’s panel of mortgage brokers, after cases were raised to Mortgage Solutions.

The developer defended this practice saying there was no financial tie-up with its panel of brokers and that it required experienced advisers to guide customers through the complex process.

White Financial Services highlighted two particular cases affecting its clients in the last nine months, including one this last weekend, where Persimmon confirmed incentives it had offered the customers would not be honoured unless they used its panel broker.

Mortgage Solutions has seen the registration form and email from a sales representative which confirmed these incentives would be removed if Persimmon’s broker was not used in the two cases.

Incentives offered by Persimmon in the deals included alterations to the property, assistance with legal fees and discounts towards additional extras.

However, brokers have been raising concerns about the new build market for some time, fearful builders are restricting competition and choice by not allowing customers to use their own choice of broker.

 

Imposed authority

Dan White, managing director of White Financial Services, said in the most recent instance, a Persimmon sales representative told customers that the builder was not bothered if they walked away as the property would be sold anyway.

“It’s no surprise that a situation like this has finally achieved some headlines. For far too long developers have played the game and imposed their authority, appearing to show disregard for their buyers wishes,” he said.

“Threatening to withdraw incentives on their properties with an attitude that their demand far outweighs what they are selling smacks of arrogance. As a result, they have adopted an attitude where they think they can dictate and overrule their customers.

“If a property has a particular sales incentive that can be negotiated it should be down to the individual negotiation, not down to what cross services are used, especially when the cross services cannot always guarantee quality and results the buyer would expect from their own experienced broker,” he added.

 

No financial tie-in

Persimmon Homes defended its decision to use a panel of recommended brokers and said there was clear communication to the customers about the situation.

“There is no financial tie-up between our recommended panel of independent financial advisors and Persimmon Homes,” a spokesperson said.

“We do not offer incentives to use our recommended IFAs however we do not offer any discount or incentive where an unknown IFA is used.

“This is principally because the reservation process is time-related and requires experienced IFAs with the correct expertise in new build properties. That helps speed the process and accurately guide the purchaser through the process.”

The spokesperson added: “The main reason for recommending panel brokers is that certain mortgage products are only available to new build sector through our approved brokers.

“In this instance the reservation was taken with the purchasers having full knowledge that they would be using the recommended IFA.”

 

Easy to get wrong

Mortgage Select is the broker which handles Persimmon referrals in the area affected by the White Financial Services cases.

Managing director Gareth Markham told Mortgage Solutions he believed these sorts of arrangements were common for most builders, although his firm only had the one with Persimmon.

Markham also noted that he had no say in whether Persimmon allowed clients to take incentives when using different brokers.

“Persimmon wanted one broker to work in the area to cover mortgage referrals, so its whatever they want,” he said.

“I know they get messed around a lot by clients saying their broker can get deals done and they can’t, because the new build market is a specialist area really.

“There’s lenders’ incentive policies, mortgage offer expiry times, loan-to-value on new build, all those elements.”

Markham added that he had seen a lot of brokers struggle with new build and not know how to approach it.

“If you don’t have prior knowledge of it and things like new build and Help to Buy, it is easy to get them wrong and severely detriment the client,” he said.

“So Persimmon see that and its why they use a broker that’s known to be ‘au fait’ with new build,” he added.

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