We don’t overstate our sales, insists Purplebricks as shares dive

ONLINE estate agency Purplebricks has hit back at renewed criticism of its methods, after a City analyst said it was hiding the number of homes it sells.

Shares in the business, which listed on London’s junior Aim market in 2015, have tumbled 16pc in two days to 418.6p after Anthony Codling at investment firm Jefferies issued a note, “buyer beware”, stating: “Purplebricks does not disclose how many homes it sells.”

Unlike high-street estate agents, which take a cut of the sale price, Purplebricks charges a fee of up to £1,200, whether it completes a sale or not.

Jefferies’ analysis found Purplebricks sold 51.6pc of the homes listed in November 2016 within 10 months, versus its claim that 78pc eventually sell. Compared with the wider market of some 7,000 estate agents, Jefferies found Purplebricks’ sales performance was no better than the average. Furthermore, “revenue may have been overstated”.

Purplebricks, which counts fund manager Neil Woodford as its fifth-biggest investor, rejected the claims, saying the analysis did not take account of homes sold subject to contract, or the time delay on recording a sale with the Land Registry. Lee Wainwright, its UK boss, said: “Jefferies’ numbers are plainly wrong. We’re disappointed and frustrated.” He said Purplebricks was “shaking up the traditional estate agent industry” that Jefferies represents, noting the firm does work for rivals Countrywide and LSL. “They’re not providing independent research,” he said.

He said none of their rivals shared data on how many sales they had completed. “Our competitors goading us to share a number that they don’t share isn’t something we’ll rise to,” he said.

In a trading update yesterday, the firm said it had received 6,160 instructions last month, a 66pc rise year on year. It claims to have a 77pc share of the online market, having completed on sales of “over £10bn of UK property”.

Adam Weeks, who used Purplebricks to list his home in London, criticised the company’s model, saying he “was surprised by how bad they were”. He added that traditional estate agents have “more incentive to sell because they make more commission”.

Mr Wainwright said Purplebricks’ agents had an incentive to perform because they were subject to frequent review by management. A Jefferies spokeswoman said it “publishes only honest, independent research and stands behind the integrity of its analysts”.