Purplebricks launches mortgage broker arm in ‘turnaround plan’

Purplebricks launches mortgage broker arm in ‘turnaround plan’

Online estate agent Purplebricks has launched an in-house mortgage advice arm as part of its “turnaround plan” after falling into the red earlier this year.

In half-year results published today (December 8), Purplebricks said ‘Purplebricks Financial Services’ - the name of its new advice arm - was launched “five months ahead of plan” on November 1 after announcing its intention to enter the broker industry in August.

Purplebricks will operate as an appointed representative.

Article continues after advert

It said customers do not need to be buying or selling a property through Purplebricks to use the advice arm.

The launch comes amid an effort by the business to diversify its revenue streams after recording a £42mn loss in the year to April 30, compared to a £7mn profit the year before.

In the six months to October 2022, losses widened. They totalled £20mn, compared with £15mn in the six months to October 2021.

Revenues were also down 16 per cent, from £41mn last year to £34mn this year. The group’s share price was down more than 2 per cent this morning.

The plan, according to chief executive Helena Marston, is to return to positive cash generation in early 2024.

Marston hopes the new mortgage model will mean it receives a “threefold increase in revenue per mortgage”.

She added: “It also provides us with the opportunity to sell additional financial products, such as insurance, to our customers, as well as generate repeat business when customers look to re-mortgage or renew other financial products.

“We are taking a compliance-led, disciplined approach and are scaling this business in a phased approach, to match our resources with the growth in demand.”

Purplebricks also operates a conveyancing business, which accounted for over a fifth (17 per cent) of its revenues in the six months to the end of October.

It appointed a chief financial officer in Dominique Highfield last month, joining new boss Marston.

“The turnaround plan is working and is being delivered at pace, with the financial benefits starting to come through in the second half of the year,” said Marston.

“We have taken further steps to reduce our cost base, from an initial £13mn of annualised savings to £17mn, while also investing in our strategic priorities and increasing the efficiency of our field.”

The new chief executive said the company’s plan to diversify revenue streams and build a more scalable, balanced business, with less reliance on instructions was “gaining momentum”. 

She added: “We launched our new mortgage proposition last month, five months ahead of plan, and are rapidly scaling our conveyancing services to the buyer segment of our customer base.”

At the end of last year, Purplebricks revealed it had put aside up to £9mn to prevent buy-to-let investors which used its services from being exposed to legal action.

During an internal review the company said it became aware of “a process issue” in how it was communicating with tenants on behalf of its landlords in relation to deposit registrations.