It is telling that Persimmon (PSN) is one of only two UK-listed housebuilders to reinstate dividend payments in the wake of the coronavirus pandemic. The FTSE 100 group has been a dividend king – crowned with the help of the government’s Help to Buy scheme. Investors have been drawn to the bumper payouts on offer in recent years, which by the start of 2020 had propelled the shares to almost treble the value seven years earlier, when the scheme was introduced.
The government support scheme was introduced in then-chancellor George Osborne’s 2013 Budget, aimed at improving peoples’ chances of home ownership. At the time, the Conservative government was presiding over a stagnating housing market, with huge numbers of the population struggling to get onto the housing ladder.
Under the scheme, the government provides a loan of up to 20 per cent of the cost of a newly built property – or 40 per cent in London – up to the value of £600,000. Would-be homebuyers can put down a deposit of as little as 5 per cent and take out a mortgage to fund the remainder of the purchase. The equity loan is paid back to the government after 25 years or when the home is resold.