Purplebricks admits putting landlords at risk of legal action
The company is putting aside between £2m and £9m to settle any claims brought by tenants against the landlords it works for. However, an industry insider has been quoted as saying that the liabilities could be as high as £30m.
Purplebricks says it won’t publish its half-year results, due tomorrow (14 December), until the situation is clearer.
Legally, landlords, or their agent, have to hold renters’ deposits in a national protection scheme and give certain documents – known as ‘prescribed information’ – 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 from their landlord. Tenants have a six-year limitation period in which to make a claim against either the agent or their landlord.
Purplebricks has admitted that since the company was founded in 2012, it has failed to properly serve the necessary prescribed information.
In an update on its lettings management business, Purplebricks stated: “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 to 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.