OPINION: If this rumour is true, is it the end for Purplebricks?

It’s not often I write about the same subject twice in a row but I’m going to make an exception.

In my previous column for Property Industry Eye I speculated on the Purplebricks money back guarantee and posed whether it’s worth the website code that it’s written in. From the reaction the article received it seems that many agree with me and that it would probably be easier to persuade Chris Wood to lend James Munro at NTSEAT a tenner than to get money back from the accountants at Solihull.

Now, hot on the heels of this story is a rumour that comes from a well-placed Purplebricks insider and that, if true, will not only make big headlines in the property and financial press but might also ultimately put the lights out at Cranmore Place for good.

The Purplebricks business model is predicated around a number of aspects that protect costs, given the ultra-slim net margins with which they operate of only 7%. One such aspect is their reliance on technology and related automation. Another is their distant relationship with anything that resembles chain-checking or sales progression. Another is that the majority of their workforce are self-employed – 60% in fact (Source: Purplebricks Annual Report 2021).

This 60% represents the company’s Local Property Experts or ‘LPEs’. There are around 600 of them engaged at any one time and their cost to the business is significant at over £33m in 2020/21 – equivalent to more than 36% of total revenue. But, this cost is mitigated because this aspect of their 1000 strong workforce is self-employed.

In other words, it’s much cheaper to use self-employed salespeople compared to employed salespeople.

So, and here comes the punch… what if those 600+ self-employed individuals were to switch to being employed? Quite a U-turn, eh?

Quite apart from the additional cost to Purplebricks’ business and a huge question mark over the implications upon their future financial viability, what of the impact on the LPEs themselves?

Well, the grapevine tells me that this is exactly what’s about to be announced. It’s rumoured that Purplebricks is about to dictate that all LPEs will become employed.

First, the company maths. You’ll remember that I took a stab at this last time in pre-supposing what fate Purplebricks would suffer if it had to refund all of the money to customers for whom they’d failed to sell a house. The benefit of talking about publicly listed businesses is that their numbers are there for all to see – handy when you’re proving a fiscal point.

Again, £33.2m was the amount paid by PurplbBricks to their 600+ self-employed LPEs in the last financial year. Being monies paid to outside contractors, this amount does not attract employer National Insurance contributions nor auto-enrolment pension costs.

Which means that when LPEs enter formal employment, the National Insurance levy at 13% of employee earnings will add £4.3m to Purplebricks’ annual costs.

For pension contributions add another 3% as the employer’s minimum – call it £1m. Total – a not insignificant £5.3m and, by coincidence, roughly the amount of profit that PB made last year.

But it doesn’t stop there. When employing staff an employer is responsible for sick pay, holiday pay, maternity/paternity pay and redundancy payments, overheads that are avoided when using self employed agents.

For example, average annual sick pay per employee in the UK is £460. That extrapolates to another £276,000 in PB’s case here.

Plus basic pay? Wow, that would put a massive dent in cash flow too.

Also, I wonder if Botha and Darvey have stopped to consider the spectre of employment tribunals? These days, judges can award up to £89,000 for unfair dismissal, more for cases of discrimination, and so it’s a line in the P&L that needs not be ignored.

One wonders whether there will be moves to mitigate these costs by reducing LPEs’ commission rates? It wouldn’t surprise me. I’d say they almost have to.

This is all adding up fast and seems to take Purplebricks back under the waterline if they are intending to (or are being forced to) make this move.

The consequences for LPEs? The self-employed avoid National Insurance at source. They also pay Corporation Tax at just 19% (for now) on profits, not standard income tax at the higher rate on monies not drawn. Being self-employed also means being able to claim for expenses against tax such as phone, fuel, car, stationery and even part of their bills at home if they work from there. These perks will all disappear overnight if and when their employment status is switched to suit Purplebricks’ management.

The consequence of this decision seems pretty dire to me. For both sides.

Interestingly, it’s also slowly morphing Purplebricks into the one thing that they were supposed to be the opposite of, that entity that they’ve passionately campaigned against the most – a traditional estate agent.

Ironic that.

Is this the end? Or perhaps it’s actually a new beginning. Who knows, maybe one day I’ll be writing about their plans for a ‘success only’ fee and a fully-fledged sales-progression capability?

Watch this space…

Russell Quirk is co-founder of property PR specialist ProperPR and regular commentator on the industry and the housing market for broadcast media. The opinions expressed are his own.

[Purplebricks was offered the opportunity to give a statement in relation to this article. They declined.]


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  1. MarkJ

    Genuine question: Do most LPE’s have their own Ltd companies then?

    If thats the case I thought the Govt. had already introduced the Off Payroll working rules change in April 2021 ….that medium and large companies (using contractors/self employed ) had to make their own determination of whether each individuals contract fell within IR35?

    So should they not have been classed as employed from April 2021?

  2. AndSotheStoryBegan

    All very valid, but if one asks the Simon Sinek question: Why?

    The answer would seem to be to first enrich themselves with other people’s money. Rather than to build a sustainable business that serves the consumer and cares for its workforce.

    They seem to have succeeded on that score and the fate of employed/self-employed will be considered collateral damage if “the lights do go out.”

  3. WatchingwithInterest

    Heard loads of LPE’s are desperately unhappy as they have no valuations coming from PB advertising.
    Might not matter whether self employed or not.

    1. AgentQ73

      If they go employed they will have to be paid at least minimum wage regardless of if they are listing properties or not.

  4. Ostrich17

    As responsible journalists, I am sure PIE will have asked Purplebricks Plc that question already.

    Otherwise, publishing an article like this may well have implications – particularly if it has an impact on the share price today.

    Pass the popcorn 🙂

    1. John Murray

      100% has implications, like self-employed PB’ers join PB to be self employed. If they are directed to become employed, there will be an exodus.

      1. Robert_May

        They cannot be self employed in order for the  company that ‘doesn’t employ them’ to avoid national insurance,  minimum wage and working time regulations

  5. TopBanana

    An interesting read. Seems PB is disintegrating without the Bruce brothers being around to run things

    1. Justcurious

      Ha ha, doubt PB would even be in business had the Bruce brothers still been around.

  6. iainwhite87

    The territory owners and area team have been called to a meeting today in Birmingham and the LPEs to the same on Wednesday so something is in the air .

  7. haveathink

    Speaking in general terms only and my understanding only I believe   HMRC does not take kindly to these arrangements if the individual is solely engaged by one company – individuals are also potentially liable for past tax too (think of all the retrospective cases that get highlighted).



  8. smile please

    I have been saying for a while PB will have an issue due to IR35 ….. Is this an agreement with HMRC so they are not hit with backdated tax bill/.

  9. Bosky

    The consequences for LPEs? The self-employed avoid National Insurance at source. They also pay Corporation Tax at just 19% (for now) on profits, not standard income tax at the higher rate on monies not drawn


    Russell, how can one be self-employed and pay Corporation Tax?

    1. John Murray

      I am self-employed, have a limited company and in my 1st year of trading with eXp I am in profit. When I complete my annual accounts I will then have to pay Corporation Tax. You pay it on profit.

      1. Bosky

        Self-employed and limited companies are two separate entities. Corporation tax is applied to company profits shown in your annual accounts and income tax is applied to net income shown in your self assessment. So, in this situation, sounds like your income is received as officer/director/employee of a company rather than self-employment.

      2. FUDGE53

        John, you are not actually Self Employed.  You are employed by the Limited Company hence the furore with the Furlough payments when people like yourselves (receiving dividends) were left in limbo.

        1. John Murray

          I understand that. Thanks.

          1. John Murray

            So funny someone gives you a thumbs down for saying “I understand that, thanks”. Having a bad day?


            1. mmmm

              Welcome to PIE!!

              Your comment probably allowed some cheerful soul to feel big and clever because they knew something you didn’t, which of course, due to them being a bozo, meant they needed to attempt to make you feel bad by ‘disliking’ your comment.

              I bet whoever it was has loads of friends and is great fun to spend time with.

  10. flockfollower102

    At the risk of being accused of hijacking this post, can we relate this back to the NTSEAT article ftom Friday? [Sentence removed as it breached posting rules] Why can we not lobby for a proper enforcement scheme as an industry?

    I know the problem is there are too many people with too much to lose. NAEA, RICS, OEA etc. But surely it would be sensible for the organisation that received complaints from consumers to also be in charge of enforcing the rules.

    If we had some proper joined up thinking, we would have a better, more professional and profitable industry and the consumers would get what they were actually paying for most of the time.

    1. flockfollower102

      Interesting, the article makes various accusations of PB, but it would appear that Eye are not keen for things to be said about PB in the comments!
      Come on Eye, why do you not campaign for better regulation of the industry. Do some investigation into the people that it is generally aknowledged do not stick to the rules. (No names given but the readers will know who they are!)

  11. Chris Wood

    Some may recall comments in PIE and a couple of articles I wrote as well as social media posts a few years ago. Remember the Uber and Pimlico plumbers ‘workers’ status cases anyone?

    If HMRC and other agencies decide to look back at ‘self-employed’ LPEs tax, hourly wages, VAT, ICO and AML registrations and other legal matters, it could leave more than just a tornado sized hole in the accounts, court appearances could follow.

  12. Chris Wood

    Coincidence? Breaking: PURP major shareholding announcement:


    1. PeeBee

      Third dump in a month by Jupiter – 40% of their total holding ditched.

    2. Bosky

      Just a notification of a fund reducing their holding by 2.28% (edit to add of the share capital)

      1. AgencyInsider

        Er no. You might want to re-read the RNS.

        1. Bosky

          Not sure what I am missing, the only RNS issued today for PB is about a reduction in Jupiter’s holding, being 2.28% of the share capital.

          1. PeeBee

            You are correct, Jupiter have reduced their holding by 2.28% of the total share capital.  But they didn’t own all of the share capital – just a bit of it.  And it’s that ‘bit’ that matters when it comes to acquisitions and disposals.
            Reducing their holding as they have from 12.77% to 10.49% is actually a reduction of 22.55%.  Significant as a standalone transaction – but this is the third dump in a month – a point at which they had a 17.52% holding. 
            So, in instalments, they have shed just over 40% of their total holding.  In a month. 
            I’m no share guru – but that sounds a lot in a short space of time.

            1. Bosky

              Reducing ones holding is not indicative of a looming problem. It could just be PB no longer fit in their investment strategy. Also, I note late last month a growth fund acquired a 5.7% stake.

              1. PeeBee

                Not sure they acquired that stake all on the same day, Bosky – they crossed a threshold that required an RNS.

                But even assuming they did, they have bought at what they probably think is the bottom of the market in terms of the SP.  It certainly is as far as 2021 is concerned – which is strange considering the “purple patch” (pun intended) that the industry has “enjoyed” in that period.

                Maybe a punt on the basis that “the only way is up”, perhaps?  That’s exactly what Sdaltaf101 – aka ‘Prophet’n’Loss’ – was banging on about in July 2019…

                …when they were sitting at around 110p.  Within 10 months they had sunk to just 32p.

                But like I said, I’m no share guru.

          2. AgencyInsider

            Bosky -The edit you made to your comment now makes sense of your original assertion.


  13. Bosky

    How I am reading Russell’s article is that he seems to be implying that making all the LPE’s employees could be the demise of PB; me thinks not.
    It would not surprise me that this could be part of the transition PB will be going through. PB have lost their way a bit and, it appears, a realisation that their pay now model just will not give them the traction needed to get to where they want; I do though feel it has positioned them to move forward with a different model, although not convinced it will be the money back guarantee that will get them there, but more to the traditional model, save for working from home that they are already setup for and maybe large bricks and mortar outlets won’t go amiss; they can call these Purplebricks & Mortar! sorry, could not resist.
    If PB’s inability to achieve their desired market share is down to consumers still preferring the pay on sale method, then what would happen if PB moved to that model, bearing in mind they will be doing it from a relative position of strength and consumer awareness. Granted, it will be a hard decision for the top brass to make as it will be a recognition of failure; maybe that could be why they are moving to a betwixt offering, being a step closer to traditional agency.
    Personally, if PB moved to the traditional model, let the agent beware.

    1. PeeBee

      “Personally, if PB moved to the traditional model, let the agent beware.”

      Bosky – I’d welcome you putting some meat on that comment.

      1. Bosky

        We both recognise that an awful lot of agents are complacent, but reading comments on any article that relates to PB clearly show the majority of agents also treat PB with contempt, and anything negative about PB seems to reaffirm their stance that PB will eventually fail; maybe to provide some solace to their own drifting existence.  

        1. Robert_May

          What you will have is the same LPE’s on a basic salary. Instead of the hunger to list everything the same set of skill will become clock watchers. The real talent would be better off  with  a Ewemove franchise than being an LPE.

          Changing the business model will not  change the ability of the staff and it won’t change the history the  company has built. The list it and leave it alone reputation is going to be a devil to overcome

        2. PeeBee

          Bosky – to respond fully I will answer each of your points in order.
          “We both recognise that an awful lot of agents are complacent”
          Not sure in what context you are meaning here.  Complacent in their attitude to work generally?  Again – that could have a myriad of meanings – but I will concede that there is a degree of ‘general’ complacency within the industry.  But that is at all levels; and all models.
          Or are you suggesting complacency towards the likes of Purplebricks from ‘traditional’ Agents?  I wouldn’t necessarily argue with you on that front either – but would suggest maybe… at least with some… it’s more a case of indifference than complacency.  We’ve had the bargain bucket Agents hawking their services on pretty much every High Street for decades and survived through it all.
          People who buy cheap, often have to buy twice – alternatively the ‘value’ of what they bought costs them dearly in the long term. 
          It’s the same with the majority of goods and services – Agency is no different, but the stakes are potentially that much higher.
          “comments on any article that relates to PB clearly show the majority of agents also treat PB with contempt”
          Is this in the least bit surprising?  Purplebricks have treated the entire industry to contempt since the burst onto the scene, so it is of little wonder that they receive in return precisely what they have given.
          “anything negative about PB seems to reaffirm their stance that PB will eventually fail”
          Can I suggest that there are several camps out there – all with similar ‘hopes’ but all with different reasons behind those hopes.  I’ll ignore the middle ground and go to the extremes here:
          If an Agent wants bricks (or any other Agent for that matter) to crumble for the simple reason they have lost a few instructions to them, then that agent needs to give their company head a shake and look in the mirror for the problems, not blame another for simply going about their business – which in the case of bricks is listing properties and collecting a Fee.  Same Agent is equally likely to wish gout or raging acne upon the vendor for having the audacity to instruct another.  In my opinion, that kind of Agent is as unhealthy for this industry as the one they wish failure upon.
          If, on the other hand, an Agent firmly and passionately believes that any company working within our industry that sets about ‘winning’ listings via a sustained campaign of proven falsehoods, mistruths, statistical f***wittery (credit: Jonnie) and conduct unbecoming of what is a professional industry deserves nothing better than to be driven back under the stone that it should never have been allowed to emerge from – then that Agent has my full and unequivocal backing.
          “maybe to provide some solace to their own drifting existence.”
          I fail to see how that would be the case.  If an Agent was to be purely “drifting” then I strongly doubt that they could be in existence now… but I would go as far as to say that there is no doubt whatsoever that they would not have been able to exist at all in a world before the likes of ‘bricks came along.  Good Agency – REAL Agency – has been severely weakened (or “dumbed down” to coin the buzz-phrase phrase) by a large section of the newer models.  The Government of the time lowered the bar to allow increased competition and choice for “the consumer” – who have done nothing but pay for it since.
          Competition is good – as long as the competitors are evenly and fairly matched.  No-one likes seeing a one-sided fight – unless they are just there for the blood.
          Had ‘bricks – or any of their likes – been what they could and should have been, then I would have joined them in a heartbeat.  If they would have had me, that is.  But in reality, if they had been what they could have been – then maybe I wouldn’t have made the cut.  There are a lot of “better” Agents that I was/am…
          …but I would argue til I turn blue in the face that there are few with more passion and genuine desire to perform the job that a vendor entrusted me with – a trust that is often overlooked and seldom treated with the degree of importance it deserves.
          Now – pick the complacency out of that, if you will…

    2. jan - byers


    3. AgentQ73

      If they moved to pay on completion they would have virtually Zero income for three to four months, not convinced they have the cash reserves to do that.


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