Purplebricks (PURP.L) will seek government help to pay staff wages and avoid job losses, as the UK property market seizes up amid the coronavirus outbreak.
The online-focused estate agent is rolling out virtual viewings and even valuations, but expects to take a hit as UK property sales slump.
It has downgraded its sales forecasts for its financial year to April, saying they would fall below previous expectations. It said it was too early to predict the full financial impact of the coronavirus on its 2021 financial year.
Demand for selling and buying homes has fallen and will fall further after a government warning over house moves on Thursday, according to Purplebricks.
The company announced a series of “stringent cost-cutting measures” in a statement on Monday, suspending all TV and radio ads and slashing online marketing.
The company will also apply for the UK government’s COVID-19 job retention scheme, where the taxpayer foots the bill for up to 80% of pay for staff who would otherwise face the axe.
It said it was “currently assessing how to implement” the scheme, with no further details provided about the number of staff likely to be furloughed.
It said the measures would help it burn through less of its £35m cash reserves, and create a “lean operating model.”
“The COVID-19 situation continues to evolve and is likely to remain uncertain for some time,” it added.
The UK government urged anyone buying or selling property to delay moving last week, after announcing a ban on all but essential travel. Even buyers and sellers who have exchanged contracts are encouraged to move only once official stay-at-home rules have been lifted, unless they cannot legally or practically reach an agreement to delay completion.
Estate agents have been told not to open branches or visit homes for market appraisals, while surveyors have been told to avoid non-urgent surveys of occupied properties. Renters are also encouraged to delay moving house where possible.
A combination of the lockdown, fears of infection during viewings and the declining health of the wider UK economy are reversing the fragile recovery seen since December’s election.
Listing site Zoopla has predicted a 60% slump in transactions in the months ahead as homeowners stay put and buyers. Its rival Rightmove (RMV.L) scrapped its dividend and stopped offering its investors financial guidance on Friday, and has already offered estate agents 75% relief on fees as their revenue slides.
“Critical” home moves are permitted however, and the government said transactions should go ahead if a property being sold is vacant.
Purplebricks said its strong digital capabilities put it in a good position to adapt to the lockdown. Sellers can still list properties on its site using their own photos, as part of a “complete online model.” The company is also now valuing properties and allowing potential buyers to view them remotely using video software.
It is also shifting its workforce to remote working, amid controversy over other estate agents reportedly continuing to order staff into work.