MortgagesMay 18 2023

Purplebricks' new owner plans to ‘treble’ mortgage arm

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Purplebricks' new owner plans to ‘treble’ mortgage arm
Purplebricks first announced it was considering a sale back in February after suffering losses of £42mn (Chris Ratcliffe/Bloomberg)

Online estate agency Strike told FTAdviser that it plans to treble the size of its mortgage arm over the next 12 months, once the purchase of Purplebricks is complete.

It was announced yesterday (May 17) that Purplebricks had reached a deal to sell the business for £1 to fellow online estate agency, Strike. 

Purplebricks announced only last November that it was opening a mortgage broker arm as part of its “turnaround plan” to get the business out of debt

All of the firm’s 750 staff are to go through a consultation process in relation to their jobs, with a number of redundancies expected.

A spokesperson for Purplebricks would not comment on how the mortgage brokers in the business will be impacted by the sale or how many mortgage broker's jobs are at risk. 

Strike chief executive Sam Mitchell told FTAdviser that if its acquisition of Purplebricks is approved by shareholders, it plans to operate both businesses initially and then create one bigger team “quite quickly”.

"Both financial services businesses are appointed representatives of MAB which make this quite a smooth process.

"Our aim would be to treble the size of the mortgage business - number of brokers - over the next 12 months as we believe there is huge untapped potential in the Purplebricks’ business,” Mitchell said. 

Purplebricks first announced it was considering a sale back in February following further cuts to the business.

The cuts were a result of last year’s turnaround plan, which cost the company more than it had initially anticipated. 

Commenting on the sale, Purplebrick's chairman Paul Pindar said he was "disappointed with the financial value outcome, both as a 5 per cent shareholder myself and for shareholders who have supported the company under my and the board's stewardship."

"However, there was no other proposal or offer which provided a better return for shareholders, with the same certainty of funding and speed of delivery necessary to provide the stability the Company needs."