Purplebricks is delaying release of its half-year figures which were scheduled to be given to shareholders tomorrow.
This follows revelations in the Daily Telegraph that the firm could face a bill of as much as £30m “after it put thousands of landlords at risk of being fined.”
The newspaper says: “It is understood that since the online estate agent was founded in 2012, it has failed to properly serve legally required documents to tenants explaining their deposits have been put into a national protection scheme.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 said Purplebricks' historic liabilities could be as high as £30m, assuming everyone eligible to make a claim did so."
This morning Purplebricks announced that it estimated the likely payout at a lower level - £2m to £9m.
Purplebricks had been scheduled to issue its half-year figures tomorrow morning: its share price suffered a sharp fall last month when it released a profits warning, suggesting that this week’s figures would be particularly bad news for shareholders. However, the half-year results have now been delayed for an unspecified period.
The agency's share price - just over 31p at the end of Friday - is already under threat as a result of an expected legal action on behalf of former workers at the agency who contend they were eligible for holiday pay and some other entitlements. Some estimate that Purplebricks could be liable for £20m in payouts if that legal action is successful.
There has also been a rapid turnover of senior staff - both the chief marketing officer and the head of lettings have quit in the past month.
Returning to the tenants’ deposit legal threat, the Telegraph goes on to quote Alisha Butler of Phoenix Solicitors, a legal firm in Wirral which is representing clients with claims against Purplebricks who says: “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."
Meanwhile Purplebricks has told Estate Agent Today: “We have recently become aware of a process issue in how we have been communicating deposit registrations with our tenants.
“This is an administrative issue and tenants’ deposits have been secure at all times. We are currently investigating the matter fully.
“We are not going to comment on the potential liability. We expect the actual financial impact to be significantly lower.”