Purplebricks’ landlords let down amid lettings management failures

Specialist solicitor for landlords, Aimee Phillips of Holmes & Hills Solicitors, discusses Purplebrick's share price drop amidst their misstep in not communicating with their tenants in regard to the tenancy deposit scheme.

The online estate agency, Purplebricks, has come under fire recently after an internal review brought to light their failure to follow the correct procedure when communicating with tenants on behalf of its landlords in relation to deposit registrations.

Purplebricks has indicated that they intend to delay the publication of their financial results for the first half to enable them to make provision for any potential future claims which could be brought against their landlords by aggrieved tenants. Purplebricks estimates their potential liability to be between £2 million and £9 million, the prospect of which has caused their share price to drop by 21%.

Why the tenancy deposit scheme is important?

The current legislation stipulates that landlords have a legal obligation to protect tenant deposits by placing them in a government-approved tenancy deposit scheme (“TDP Scheme”). Within 30 days from the date on which a landlord receives a deposit from the tenant, they (or an agent on their behalf) must provide the tenant with the following prescribed information:

• The address of the rented property
• How much deposit was paid
• How the deposit is protected
• The name and contact details of the TDP Scheme and its dispute resolution service
• Their (or the letting agency’s) name and contact details
• The name and contact details of any third party that’s paid the deposit
• Why they would keep some or all of the deposit
• How to apply to get the deposit back
• What to do if the tenant cannot get hold of the landlord at the end of the tenancy
• What to do if there’s a dispute over the deposit

It is this information that Purplebricks failed to provide to tenants on behalf of their landlords and, as a result, tenants who entered into tenancy agreements via Purplebricks at any point between 2012 and now, maybe entitled to between one and three times their deposit in compensation for breach of the current legislation.

Landlords whose properties are managed by Purplebricks should prepare themselves for the prospect of their tenants bringing these claims.

If you require legal advice in relation to whether you have grounds to bring one of these claims; or you are a landlord whose tenant intends to make a claim against you; or you are unsure on how to protect a tenant’s deposit, Holmes & Hills Solicitors can assist you.