Purplebricks could face a bill of as much as £30m after it allegedly put thousands of landlords at risk of being fined after failing to follow basic tenancy law.
EYE recently revealed that the online estate agent failed to properly serve legally required documents to tenants explaining their deposits have been put into a national protection scheme, and now it is being reported that this could result in substantial fines for the company.
These documents, known as prescribed information, must be given to tenants within 30 days of the deposit being paid. Failure to do this means the tenant can claim back up to three times the value of the money.
Tenants have a six-year limitation period in which to make a claim against either the agent or their landlord. A source with knowledge of the business told the Telegraph that Purplebricks’ historic liabilities could be as high as £30m, assuming everyone eligible to make a claim did so.
Alisha Butler of Phoenix Solicitors, a legal firm in Wirral which is representing clients with claims against Purplebricks, told the press: “The court does not have discretion as to whether they can or cannot award compensation; they must award it if the landlord or agent has breached their obligations.
“While claims can be brought against an agent for their failure to protect a deposit, ultimately the buck stops with the landlord, who can be sued as a result of the agent’s failure, even if they did not know about that failure.”
A Purplebricks spokesperson told EYE: “Due to the introduction of a new lettings IT system, a small number of tenant deposits were not paid into an authorised deposit scheme. As soon as we identified this issue, we took action and have now registered these deposits.”
Landlords could face fines after Purplebricks fails to protect tenancy deposits
*shrugs* Par for the course for their offering. They still haven’t updated that other thing…
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And they publish their address list of letting properties too in case any ambulance chasers want to do some direct mail. Actually wasn’t there one on Twitter? I might push it under their nose…
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The No win,no fee bottom feeders will go after the landlords. After all they have a property to squeeze money from. The landlords will then go after PB who may cut and run by going into administration depending on the size of the bill.
Commisery all round.
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I really honestly thought that PB killing a tenant would be the lights out moment…
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Which PB director or *EMPLOYEE* down-voted this?
UPDATE YOUR PAGES INSTEAD.
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What an absolute shower. Failing to comply with very basic lettings legislation. Failing to comply with AML regulations. I bet that’s just the tip of the iceberg. They deserve everything they get.
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Honestly mind blown. Serving the PI is as about as basic as you get.
Where does the blame lie? I guess this has been happening for a while so go back a year or two and who was in charge of lettings for PB?
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What a pantomime; could this be curtains for PB!
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It’s taken to spotlight off IR35….. I wonder whether they are re-serving PI in accordance with s44 of the Companies Act? Additionally, any tenants being asked to leave and who ignore notice are unlikely to get evicted adding to Landlord’s woes. This will also flag up the tenants right to receive 3x the deposit. Of course, PBs could return the deposit, but then who will pick up the tab for any damages? It’s an interesting one. ‘Upto £30m’ implies £10m of unprotected deposits. Even PBs say ‘upto £12m’ which implies £4m of unprotected deposits. That’s not a ‘small number’.
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s44 of the Companies Act:- No longer an issue.
This will also flag up the tenants right to receive 3x the deposit:- 3x is max, it could be between 1 – 3 x the deposit.
Of course, PBs could return the deposit:- Does not prevent litigation by the tenant.
but then who will pick up the tab for any damages?:- Tenant of course, but landlord will now need to rely on court route for claim on dilapidations.
Telegraph says up to £30m, PB says up to £9m, not seen £12m. Whatever the figure is, it will be difficult to work out the number of tenancies as there could have been multiple failings for the same tenancy, renewals for example, but, based on PB’s upper figure of £9m and assuming no multiple failings for the same tenancy, I recon PB are looking at between 2,500 – 3,000 tenancies.
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Remember it is up to 3x the value of the deposit plus the return of the deposit itself – so in effect potentially 4x the deposit to be paid out by the Landlord. Inevitable the landlord will claim against PB for the negligence. This may be covered by insurance even if/when they go bust ?
In the event of a dilapidations claim that could have been claimed against the deposit had it been properly registered then the landlord could claim any financial loss from PB too.
As others say this is much bigger than PB initially indicated if they are saying it could cost £9m meaning there are approx £2.25m of unprotected deposits. Based on the average UK rent of £1058.00 with a 5 weeks max deposit then there are approx 1850 potential claims against PB.
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S44 no longer an issue? Wow. You need to tell the lawyers at JMW solicitors that as the appeal hasn’t been heard yet. I am sure David Smith will win, but it’s not over until the ruling. Several possession hearings have failed recently over this issue. What do you know that no one else does? The Law as it stands is clear.
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Ok, maybe I should not have said it is no longer an issue, as I accept that a higher court is yet to interpret the DA 2015 amendments to the HA04 in a way that I have stated.
The issue, as far as I know, is where letting agents who are limited companies sign the PI as a letting agent on behalf of a landlord, but, a belt & braces approached by applying s44 of the CA06 would remove any ambiguity. A way round this would be to sign as an employee of the letting agent, assuming T&C with the landlord allow for this, as this removes the limited company from the signing.
Ambiguity keeps solicitors busy, but I hope a higher court will establish once and for all that compliance with S44 of the CA06 where a letting agent who is a limited company signs PI is not required as far as deposit protection is concerned.
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Wow. You think getting an employee to sign is a work around? Read the the law. It’s very clear. I sincerely hope you don’t work in compliance.
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(posted also on the Trading Update delay thread)
**BREAKING NEWS** (or at least it should have been…)
twitter.com/naea_uk/status/1470474683355181060
As follows:
“In response to media reports of @PurplebricksUK delaying half year results, @PropertymarkUK take any allegations against our members seriously and we will be investigating the claims of failure to properly register tenancy deposits.”
The thread continues:
“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.”
Then
“Agents fight against a stigma and ensuring processes are in keeping with legal and professional standards, is a key part in changing the sector’s reputation.”
Only one thing to say… WELCOME TO THE PARTY, @PropertymarkUK. You’ve been a big miss – for the last seven years…
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