Pressure builds on Purplebricks as City veterans fight for control

Two City veterans head into a row over the future of ailing online real estate agency Purplebricks.

Shares in the loss-making company are now worth 9½p – a far cry from their 2017 peak of £5 – amid concerns about the company’s strategy and the state of the property market.

Chairman Paul Pindar, who was responsible for turning Capita into a FTSE100 outsourcing giant, is under pressure from an activist investor who wants to replace him with Rightmove co-founder Harry Hill. The dispute will come to a head at the Purplebricks shareholders’ meeting in London tomorrow.

Brickbats: Harry Hill, right, says Purplebricks boss Paul Pindar, left, may have to quit

Purplebricks has advised shareholders to oppose the move to unseat Pindar from Huntress Nominees, backed by activist Adam Smith’s Lecram investment vehicle to unseat Pindar.

Hill founded Rightmove, which later also became a FTSE100 company, and built up the Countrywide property agency group before selling it for £1billion.

He told The Mail on Sunday he was “intrigued” by Purplebricks’ business model and the potential for a turnaround. Unlike traditional real estate agents who charge a percentage of the sale price, Purplebricks takes a flat fee for every property listed – whether it sells or not.

The number of these so-called orders is stable but revenue from them fell from £26.6m to £24m in the six months to October. Halifax says house prices are falling at their fastest rate since the 2008 financial crisis, and Hill has warned they could fall by as much as a fifth.

Hitting out at Purplebricks’ ill-fated overseas acquisitions, Hill said he would reconsider its business strategy and vowed to scrap the ads as he said brand awareness was already high. He also said Purplebricks would “never turn a profit” if it offered similar services to traditional estate agents, while only charging a flat fee of £1,200 (£1,500 in London).

He said, “It’s impossible. You can not do it. Selling houses isn’t easy, it’s bloody hard.’

He added: “If you try to keep up without asking for more money, you will fail.”

One option is to close the company and return £30million in cash – its market value – to long-suffering shareholders, Hill said.

German publisher Axel Springer plans to vote for Pindar even though the value of his 27 percent stake is all but wiped out.

But Hill urged Pindar to quit if institutional investors, who own the bulk of the shares, don’t back him.

“If I were him, I’d be personally embarrassed and I’d say it’s probably about time someone else tried it,” Hill said. He also reserves his judgment on new CEO Helena Marston and her team.

“It has yet to be proven whether the local people are willing to do this or not,” he said. “They have only been in place for a relatively short time. The CEO doesn’t have an agency background, but that doesn’t necessarily mean she can’t.”

Purplebricks declined to comment on reports the company was planning to increase its flat fee to at least £3,000 in the New Year in London and the South East.