Purplebricks swings to loss amid deposit woes

Online estate agent Purplebricks has swung to a loss in the last six-month period as the business lost market share to its rivals.

Purplebricks said that it had taken a £12.9 million loss before tax in the six months to the end of October, compared to a 4.3 million profit in the same period a year earlier.

Revenue meanwhile dipped 7% to £41.3 million, the business said.

The business said that it had seen a 38% drop in instructions, as it lost 0.9 percentage points of market share.

However, due to booming housing costs, the amount of revenue it made per instruction rose 15% to £1,642.

“The first half was undoubtedly challenging, with the implementation of a major change to our operating model coinciding with the UK property market experiencing a substantial fall in new instructions,” said chief executive Vic Darvey.

“This dynamic led to a disappointing financial performance but we are confident that we now have the right levers in place to drive a stronger financial performance going forward.”

The publication of the company’s results for the half year had been delayed by over a month after it discovered a potentially costly problem in how it communicated to tenants.

Its lettings arm had not properly explained to tenants that their deposits had been put in a protection scheme.

This promises to prove costly for the business. However, on Monday Purplebricks revealed that it may not be as expensive as first thought.

It originally thought that tenants would claim back between £2 million and £9 million under the Housing Act. It now predicts claims will reach just £3.6 million.

Shares in the company rose 2.7% on Monday, but are down by nearly four fifths compared to a year ago.