Purplebricks facing £9m pay-out over deposit scheme error
Solihull estate agent Purplebricks may be facing a £30m bill after putting thousands of landlords at risk of failing to follow basic tenancy law.
Reports in The Telegraph say that, since Purplebricks was formed in 2012, it has neglected to correctly service legally required documents to tenants explaining that their deposits have been placed into the national protection scheme.
Failure to do this within 30 days of a deposit being paid could lead to tenants claiming back up to three times the value of what they have put down on their new home. They can do this up to six years after the deposit payment was made, and The Telegraph says Purplebricks could be looking at a £30m payout.
This morning (December 13), Purplebricks released a statement saying that figure will be much lower – but that the issue is serious enough that it is delaying the publication of its half year results.
The statement said: “During an internal review the company recently became aware of a process issue in how it has been communicating with tenants on behalf of its landlords in relation to deposit registrations. Further enquiries into this matter are currently being conducted and the communications process is now being corrected.
“In light of the above, the company believes that it is prudent to provide for any potential future claims which could arise under the Housing Act in relation to this regulatory process issue. Early provisional estimates by the company suggest a potential financial risk in the range of £2m-9m. Purplebricks is now in the process of finalising the level of provision required and associated disclosures and has therefore taken the decision to delay its results for the half year ended 31 October 2021 which were due to be published on 14 December 2021.”
The news follows a separate case being brought against Purplebricks by a pressure group.
Contractors for Justice (C4J) is pursuing a proposed Group Litigation Order against certain online estate agents such as Purplebricks on behalf of hundreds of former workers hired as self-employed estate agents.
The premise of the claim is that, in law, these self-employed agents were in effect employed for the purposes of holiday pay and pension contributions being owed by the company to the individual.
The claim is for as much as 20.7% of each person’s total earnings from the companies that C4J is set to pursue.
C4J has announced it now has enough claimants “to trigger the legal process against Purplebricks.”
A C4J statement says: “Claimants now number in the hundreds and the current cohort will be ‘sealed’ and pre-action papers submitted to the courts from 14th December. Any potential claimants that are considering joining the action have until midnight on 14th December to submit their intention to proceed via the C4J website.”
Each individual submission is anonymous and is accepted on a no win-no fee basis. C4J says that if the claim is not successful, there will be no legal fees to pay.
Individual claims could be worth tens of thousands of pounds, it said.
It has been reported that the C4J GLO may be worth over £20m in compensation payments.
