Speculation is growing that 
Purplebricks is preparing to offload its lettings business after allegedly putting thousands of landlords at risk of being fined after failing to follow basic tenancy law.
Recent regulatory failings have had an adverse impact on the business and pushed its share price to new lows.
Shares in the AIM-listed firm currently stand at 23.4p, down from 103p 12 months ago. The company floated at 95p in December 2015.
Now the online estate agent is reportedly drawing up plans to sell its troubled lettings business following the recent rental management fiasco
According to The Telegraph, the firm’s chief executive, Vic Darvey, and other senior employees have discussed plans in recent weeks to sell the lettings division of the company, with sources telling the publication that auditors have now been approached with a view to assessing the business prior to sale.
Purplebricks was forced last month to delay the publication of its first half results to provide for any potential future claims which could arise under the Housing Act in relation to this regulatory process issue.
The move followed speculation that the online estate agency could potentially face a bill of up to £30m after it allegedly put thousands of landlords at risk of being because it failed to follow basic tenancy law.
EYE revealed in November that Purplebricks had failed to properly serve legally required documents to tenants explaining their deposits have been put into a national protection scheme.
Purplebricks accepts that there could be future claims against the firm, and provisionally estimates a potential financial risk in the range of £2m-9m.
Purplebricks, which recently said the six-month period to October 31 had been “challenging”, is currently being investigated by Propertymark for potential tenancy law breaches.
A statement from David Oliver, head of Propertymark Compliance, said: “It is important that any allegation made against an agent be substantiated with viable evidence.
“As a representative body we take any allegations against our members incredibly seriously and we will be investigating the claims of failure to properly register tenancy deposits by Purplebricks.
“Legal procedures exist to protect both agents and their clients. Performing them properly not only protects agencies but is paramount for consumer confidence, providing transparency between businesses and their customers.
“Agents fight against a stigma and ensuring processes are in keeping with legal and professional standards is a key part in changing our reputation.”
Purplebricks has been approached for comment.
Who would buy this poisoned chalice?
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This is the very last asset that they can possibly sell to bolster the residential department.
It’s almost over…
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Asset? Have you been asleep for the last couple of months or so? Or for the past seven years, more to the point??
The “asset” you refer to is a bent cog in a broken machine. Every part is flawed beyond fixing.
Put together the ultimate ‘dream team’ from our industry and instal them at the helm, and they could not stop this beleaguered rustbucket in its’ rush toward the iceberg.
It was always going to happen – it just shouldn’t have been allowed to continue unstopped as long as it has.
The real story here is that it has taken so long; that so many of the public Agents are meant to serve have suffered loss, and that our industry core has suffered irrepairable damage as a result.
Unfortunately, that story will never be allowed to go to print.
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Was about to say interested, but in second thoughts… No thanks!
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There’s already been news that the Telegraph story is incorrect. Property Eye behind the times on this one.
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If there’s ever a way to do residential property worse than a hands off lettings outfit, I’m yet to witness it, at least on the sales side there are experienced participants who will pick up the slack on no sale no fee, it needs to happen to get paid regardless of the contribution of other chain ” agents ” who on earth is there for PB landlords or tenants?
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The clock is ticking because however slick or expensive your advertising, a bad idea will always be a bad idea. Next looming failure? Boomin! The sooner Pinky & Perky Bruce stop trying to reinvent the wheel the better.
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Why does Property Eye always look to slate Purple Bricks. I always feel there is an agenda behind the story by the writer. PB may not be the best and have made mistakes but they have done a lot to update an archaic property selling process. The current estate agent service is ancient, unregulated and simply not in the public interest. You only have to see online reviews of agents to see how the public view the industry. Online and hybrid selling is the future and the industry needs to accept it.
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Welcome to the discussion about disruption. What do you know about the case law precedents that define what an estate agent is?
Duty to act, duty of care and skill and the fiduciary obligations an estate agent has to their principals.
There is a difference between a passive intermediary lister and an estate agent. Despite literally hundreds of millions of investor’s money attempting to buy market share since 2013 when disruptors first got vocal, none of the confident claims have come good.
“By 2020 50% of all sales were going to be transacted through online agents” “By 2017 Purplebricks were supposed to have grabbed 10% market share of all completions” Purplebricks’ share price once rose to about £5, last time I looked it was about 6% of that. I explained in 2014 why non geographic agency cannot compete with #local agents, so far I have been 100% on the money.
Non geographic agents will naturally predate each other and squabble over free or low fee listings, the more people who attempt NGA the more competition there iis and the thinner the pickings are.
These stories aren’t slating Purplebricks they news stories on the current state of affairs. Once lettings was brought in house away from the outsource firm that was looking after them for Purplebricks this was inevitable. While lettings can work NG property management cannot.
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“The current online/hybrid estate agent service is equally unregulated and simply not in the public interest.”
There ya goes – fixed that for you.
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Sorry, but Purple Bricks deserve all the flack they get. The online market hasn’t really been the success it was meant to. All that has happened is mostly bad agents frustrated working for traditional agents (understandably) have switched to hybrid/online or people who have limited experience wanting to grow themselves joining with delusions of grandeur. Certainly the online market has not improved the reputation of the property industry. You only have to check the reviews of online agents.
Maybe from that aspect online technology gave the industry a kick up the backside it needed.
The market for onliners are vendors who want a listing service only. Sometimes too mean to pay a fee not fully understanding what is involved. Handling the biggest asset they will ever own with butter fingers. Onliners have their place, but unlikely to ever dominate.
Back to the failures of PB in lettings. If claims come to fruition it’s the death knoll for PB and the proliferation of bodies (if there are any left from the last exodus) across the online landscape which follows. It’s an absolute direliction of duty and a warning to anyone else that doesn’t follow the REGULATIONS
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