Purplebricks Sinks Again on Rentals Business Issue

(Bloomberg) -- U.K. estate agent Purplebricks Group Plc took a new blow after saying it discovered a processing issue in its lettings business that caused it to delay its financial results.

The shares slumped as much as 21% after the company warned that the issue -- involving how it has been communicating with tenants about deposit registrations -- could cost it as much as 9 million pounds ($12 million). It also delayed half-year results that had been due on Tuesday in order to finish calculating a provision.

“The company believes that it is prudent to provide for any potential future claims which could arise under the Housing Act,” the Solihull, England-based company said in a statement.

The share drop follows a plunge last month which came as the firm -- which charges a flat fee to clients whether a property is sold or not -- warned of a slowdown in business as the U.K. stamp duty tax holiday came to an end.

Monday’s news is “likely to have a disproportionate impact on valuation in the short term,” Citi analysts including Ross Jobber wrote in a note to clients, saying it “adds to current levels of uncertainty at a time when market conditions are themselves challenging.” 

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