U.K.’s Purplebricks in trouble

PHOTO: Purplebricks

U.K. estate agent Purplebricks Group Plc is heading for its biggest share drop on record after a profit warning that cast further doubt about its unusual business model.

“Cheap and nasty” Purplebricks – why it didn’t work down under

The Solihull, England-based company, which charges a flat fee whether a property is sold or not, fell as much as 38% after warning of a drop in business as a tax break for buyers came to an end.

“Supply in the market has fallen as we slowly adjust to a below normal level of activity following a period of successive lockdowns and the end of the stamp duty holiday,” Chief Executive Officer Vic Darvey said in a statement.

Analysts including Jefferies LLC had previously raised concerns that the model may hurt the company more during a downturn than traditional estate agents that charge sales-based commissions.