British hybrid real estate portal PurpleBricks has confirmed that it is changing its business model.

In a statement to the London Stock Exchange PurpleBricks confirmed that it will switch agents from operating on a self-employed basis to a fully employed model, commencing from August 10.

The change will affect how the agency’s 600 local property experts (LPE’s) work and operating costs of the business. PurpleBricks confirmed it wants to recruit an extra 100-plus “of the best agents in the industry who are ready to join it as opportunities arise.”

It also follows on from other significant changes to the business announced in July, when PurpleBricks introduced a money-back guarantee whereby it will refund the £999 + VAT upfront fees it charges sellers if the agency can’t sell the property and it unveiled a simplified two-tier pricing strategy. Both of these operational changes are currently being rolled out nationally and are part of the company’s plans to accelerate revenue growth, increase market share to 10% over the medium term and to deliver annual revenue growth in excess of 20% in the medium-term.

PurpleBricks said the reason for switching agents to full employment status is to ensure the company can scale up quickly to meet consumer demand and “support the delivery of a consistently high level of service to PurpleBricks’ customers.”

Agents will get more security and receive “a highly incentivized package with the ability to work flexibly and remotely,” according to the company.

PurpleBricks said the impact of the new pricing structures on the current financial year is too early to quantify but the company will incur exceptional non-recurring costs of £3-4 million as a result of moving to the new employment model and higher ongoing costs of around £1 million annually. The company also said it will launch a new marketing campaign later this year which will cost £3-4 million and be included in FY22 costs.

Last month PurpleBricks published its financial results for FY21. Revenue increased to £90.9 million ($125.8 million U.S.) from £80.5 million, operating profit rose to £8.2 million compared to a £5.7 million loss the previous year.

“The pandemic highlighted the challenges of being self-employed for many people. As normality returns, we believe that moving to a fully employed sales model will benefit and support our people and make PurpleBricks fit for the future,” said PurpleBricks CEO Vic Darvey.

“The Board strongly believes this move will increase market share and enhance performance in the coming years.”

 

 

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