WEEKLY NEWS ROUNDUP – 09/05/2023
A roundup of the week’s top property and proptech news stories in partnership with Proptech-X
Purplebricks share price falls to 2p, as online agent flounders
The newly appointed CEO of Purplebricks Helena Marston, who has never run a property business has possibly accelerated the death of the company she was meant to save.
It would seem that Helena and her c-suite team failed to realise that after the super heated 2022 market, the listing of new instructions in 2023 would fall off a cliff. Which given Purplebricks prime business model is based solely on cash upfront at time of listing, sale or no sale, means a big hole appearing in their cashflow.
That would be bad enough, but of course the online agency is itself up for sale, so telling any suitors that the company metrics are in reverse and the heady days of £90M plus cash washing through the company annually, are long gone, is probably not going down too well.
The share price of 2p will also affect the current market capitalisation vulation of the business too, again a worry for all the investors looking to get some of their cash out should a deal be done.
In the cold light of day can you sell a company like this that has never made a trading profit? True it did once make a tiny paper profit when it had a one off sale of its Canadian assets, but apart from that, this flabby behemoth has just guzzled the cash. Axel Springer has lost multi-millions backing this horse, and seems very shy about taking the reins fully, maybe they understand better than most it simply can never break-even, let alone make profit.
In my opinion and I may be wrong – buying a company that has never made a profit, burns hundreds of millions, and has a flawed business model, especially when interest rates are going skyward and inflation is out of control, is only for someone with lots of cash who wants a vanity project, that they will probably quietly close quickly when they realise what they bought.
If an investor has £40M lying around talk to me and I will show you what an online agency built with 2023 technology would look, feel and taste like. And that is Purplebricks problem, old tech and not much of it, and very few humans, so neither Amazon or the Connells group.
Renters Reform statement delayed
Back in August 2022, Michael Gove set out in a whitepaper the need for a ‘fairer private rented sector’ and it was anticipated that tomorrow the 10th of May – his findings would be unvailed, but now the report has been delayed.
The big question is why? Will it be too harsh on landlords or on tenants, or both or neither? And with an election looming which sector does the Government and Mr Gove want to pander to the most.
Back in August Mr Gove in his introduction to the whitepaper stated that,
‘Everyone has a right to a decent home. No one should be condemned to live in properties that are inadequately heated, unsafe, or unhealthy. Yet more than 2.8 million of our fellow citizens are paying to live in homes that are not fit for the 21st century. Tackling this is critical to our mission to level up the country.
The reality today is that far too many renters are living in damp, dangerous, cold homes, powerless to put things right, and with the threat of sudden eviction hanging over them.
They’re often frightened to raise a complaint. If they do, there is no guarantee that they won’t be penalised for it, that their rent won’t shoot up as a result, or that they won’t be hit with a Section 21 notice asking them to leave.
This government is determined to tackle these injustices by offering a New Deal to those living in the Private Rented Sector; one with quality, affordability, and fairness at its heart.In our Levelling Up White Paper – published earlier this year – we set out a clear mission to halve the number of poor-quality homes by 2030.
We committed to levelling up quality across the board in the Private Rented Sector and especially in those parts of the country with the highest proportion of poor, sub-standard housing – Yorkshire and the Humber, the West Midlands, and the North West.
This White Paper – A Fairer Private Rented Sector – sets out how we intend to deliver on this mission, raising the bar on quality and making this New Deal a reality for renters everywhere. It underlines our commitment, through the Renters Reform Bill, to ensure all private landlords adhere to a legally binding standard on decency.
The Bill also fulfils our manifesto commitment to replace Section 21 ‘no fault’ eviction notices with a modern tenancy system that gives renters peace of mind so they can confidently settle down and make their house a home. These changes will be backed by a powerful new Ombudsman so that disputes between tenants and landlords can be settled quickly and cheaply, without going to court.
This white paper also outlines a host of additional reforms to empower tenants so they can make informed choices, raise concerns and challenge unfair rent hikes without fear of repercussion.
Of course, we also want to support the vast majority of responsible landlords who provide quality homes to their tenants. That is one of the reasons why this White Paper sets out our commitment to strengthen the grounds for possession where there is good reason for the landlord to take the property back.
Together, these reforms will help to ease the financial burden on renters, reducing moving costs and emergency repair bills. It will reset the tenant-landlord relationship by making sure that complaints are acted upon and resolved quickly. Most importantly, however, the reforms set out in this White Paper fulfil this government’s pledge to level up the quality of housing in all parts of the country so that everyone can live somewhere which is decent, safe and secure – a place they’re truly proud to call home’.
All of the above is extremely laudable, but how exactly do you balance the rights of renters and landlords? And maybe that is why the government is re-thinking its strategy on this hugely divisive battleground of interests. Get the policy wrong and landlords leave the sector meaning rents increase as supply of property falls. Impose rent caps, again landlords will leave as their commercial lending is linked to the BoE rate, and not capped.
The clock is ticking and it is up to the housing secretary and great leveller up to keep all sides engaged, in the coming days lets see if he accomplishes this.
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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