Purplebricks swings to a loss amid legal woes

Online estate agent Purplebricks saw profits tumble in the first half of the year amid legal challenges and housing stock constraints.

In results published today, the company revealed its total loss from operations was £20.2m in the six months to 31 October 2021, down by 397 per cent from profits of £6.7m a year prior.

Purplebricks attributed a “disappointing” performance, which saw its market share decline from 4.8 per cent to 3.9 per cent, to a new “operating model,” supply constraints and legal challenges following the company’s historic tenancy law breaches.

“The first half was undoubtedly challenging, with the implementation of a major change to our operating model coinciding with the UK property market experiencing a substantial fall in new instructions,” said chief executive Vic Darvey, referencing a 38 per cent decline in instructions from above 34,000 to around 21,100.

“This dynamic led to a disappointing financial performance but we are confident that we now have the right levers in place to drive a stronger financial performance going forward,” he continued, adding that continuing uncertainty in the housing market is expected to constrain supply in the second half of the 2021 financial year.

In December Purplebricks said it was expecting to be fined as much as £9m over lapses in customer service which led to tenancy laws being breached.

The company failed to tell tenants that their deposits were to be placed in a national deposit scheme within 30 days of receiving payment which means they are now entitled to claim back three times the value of their deposit from Purplebricks.

“We were disappointed by the process issues that we became aware of in our lettings business in December,” Darvey said. |These are being corrected and a root and branch review of the lettings business has been completed in relation to our processes and procedures.”

Read more: Purplebricks shares fall by a fifth on £9m bill for tenancy law breaches