Purplebricks lettings error will cost millions to fix...

Purplebricks has revealed that it will cost some £3.6m to correct compliance issues in its lettings division.

The agency continues to stay quiet on how many tenants and landlords were affected by its failure to comply with the law requiring deposits to be placed in a government-backed scheme. It is also silent how long tenancy deposits were held by the agency before they were eventually placed in an approved scheme.

However this morning, for the first time, it has put a specific figure on the cost to the agency of the problem - some £3.6m.

In a trading statement it says: “We have taken appropriate and swift actions to address the process issues that we became aware of within our lettings business in December. We are very confident that all issues are being addressed and the business has stabilised. The provisionof £3.6m is towards the lower end of our previous guidance.”

Chief executive Vic Darvey says: "Our lettings business, while relatively small, has significant potential. We were disappointed by the process issues that we became aware of in our lettings business in December. These are being corrected and a root and branch review of the lettings business has been completed in relation to our processes and procedures.”

Late last year the Daily Telegraph revealed that an unknown number of deposits taken from tenants by Purplebricks were not registered with any one of the three government-backed schemes - they’re operated by MyDeposits, Deposit Protection Service and the Tenancy Deposit Scheme.

A statement from the agency at the time said: “Due to the introduction of a new lettings IT system, a small number of tenant deposits were not paid into an authorised deposit scheme. As soon as we identified this issue, we took action and have now registered these deposits. We are currently communicating to the affected landlords and tenants.”