Purplebricks revises down cost of tenant deposit errors

Purplebricks says tenancy deposit errors should cost the firm £3.6 million, 60% than the £9 million set aside in December.

This would be a fraction of a worst-case estimation from The Daily Telegraph in December, which reckoned it would cost Purplebricks £30 million if everybody eligible claimed.

In November last year it emerged that the online agent failed to place tenant deposits in a government-backed scheme, which means tenants can apply to get their landlords fined for three times the deposit amount.

Vic Darvey

The company’s chief executive Vic Darvey told the Standard the failure was a “technicality that was a breach of regulations”.

He said: “After a challenging few months we’ve made a number of changes to the business.

“We introduced a new pricing structure and a money-back guarantee and moved our local property agents from self-employed to employed.”

He conceded that these changes “will impact profitability in the short-term”.

Darvey went on to say a major accountancy firm is carrying out a root-and-branch review of the lettings business following the errors.

The troubled firm made a pre tax loss of £12.9 million in the six months to October, after reporting a profit of £4.3 million during the corresponding period in 2020.

This deposit error isn’t the only issue rocking Purplebricks, which has suffered a dramatic fall from grace in recent years.

Indeed, the business is now valued at £63 million, down from £1.7 billion in 2017, as it took major big financial hits from failed expansions into the US and Australia.

It’s share price has fallen by 75% in the past 12 months alone.

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