Purplebricks shares plunge following breaches of lease law Business

Purplebricks has delayed its half-year results after revealing it could be responsible for tens of millions of pounds for paperwork errors.

Shares of the online real estate agency fell by more than a fifth after it confirmed a Telegraph article about its inability to tell tenants their deposits had been placed in a nationwide protection program.

Agents are legally required to notify tenants within 30 days of making a deposit.

The error in the Basic Lease Law also exposes thousands of landlords to a fine.

Purplebricks told the stock exchange this morning that its half-year results, which were due to be released on Tuesday, would now be delayed as it assesses the size of its potential liability, estimated at between £ 2 million and £ 9million.

“The company recently became aware of a process issue in the way it communicates with tenants on behalf of its landlords regarding bond registrations. Other investigations into this matter are currently underway and the communication process is being corrected, ”he said.

However, sources with knowledge of the situation said Purplebricks’ liabilities could reach £ 30million if everyone eligible to make a claim did so.

The Telegraph understands that the error has persisted since 2012 and that tenants have a six-year limitation period to file a claim against an agent or their landlord.

Purplebricks, which was founded in 2012 and launched on Aim in 2015, was heavily in deficit until April of this year, when it reported its first annual pre-tax profit of £ 3.6million on sales of £ 90.9 million.