Could you buy a £650,000 home for a fiver (in a raffle)?
Raffles offering the chance to win a house for as little as £5 are becoming more popular. But with several recent listings falling foul of gambling rules, are they an option you should consider?
House raffles were previously a last resort for desperate sellers in a slow market, but they are increasingly now being run by businesses.
Here, we take a look at whether these competitions can be a fun way to have a chance of winning, or whether they are too good to be true.
A £650,000 house for a fiver?
In Brixton, a new property platform called Raffle House is raffling off a one-bedroom flat valued at £650,000 for £5 a ticket.
As well as the big winner, three runners up will be awarded prizes of £1,000. A further 5% of profits will go to a homelessness charity.
The company, run by entrepreneur Benno Spencer, plans to offer more homes for raffle in the next few months.
And Raffle House isn’t the only firm looking to exploit this trend, either.
Another start-up, Win Houses, is offering to raffle off homes on behalf of sellers, who can list their properties commission-free.
The company plans to run three or four competitions a year, starting with a villa in Turkey. Tickets cost £10 each and the company claims that the odds of winning are one in 80,000.
Are property raffles safe?
People are naturally apprehensive about getting involved in property raffles.
While there’s the chance of getting your hands on a home for the price of a ticket, you could also fall victim to dodgy operators or illegal competitions.
The Gambling Commission has expressed concern about members of the public deciding to raffle their homes without being aware that they are breaking the law, and recommends sellers choosing this route take legal advice first.
Examples of failed property raffles
In recent months, a handful of homeowners have seen their listings pulled after failing to attract enough interest or falling foul of gambling rules.
Here are some examples:
- Sellers of a £43,000 property in Durham failed to sell 10,000 tickets at £5 each, meaning they instead had to give away a cash prize of £7,000.
- A £25 spot-the-ball competition for a £3.5m family home in Berkshire fell through because of the failure to sell enough tickets.
- The Advertising Standards Agency ruled against a company who offered a £700,000 home by raffle, with entries costing £2, with the proviso that it was ‘unlikely to reach the necessary target and will most likely offer a cash alternative’. A complainant who claimed that the cash prize would be disproportionate to the value of the property had their claim upheld, and the company was warned such ads must not appear again in their current form.
How can you ensure a raffle is following the rules?
There are strict rules that people raffling property must adhere to.
Tickets can’t be sold purely based on chance unless the raffle is for charity, meaning there must be some test of knowledge of skill. As an example, when entering the Brixton raffle, participants must answer a multiple-choice question.
There must also be an alternative prize if enough tickets aren’t sold. Raffle House is selling tickets for the Brixton flat at £5 each, and if fewer than 150,000 are sold by the closing date on 15 June, the winner must instead get the proposed sale proceeds as a cash prize.
Tips for entrants of property raffles
Entering a raffle can be a bit of fun, but there’s a risk of your money simply disappearing, with no opportunity to win.
While these aren’t legal guidelines, the following tips can help you decide whether to part with your money in a property raffle.
- Do your research on the listing. If the home is being listed by a company, check its credentials. If it’s officially an estate agent it should be signed up to a redress scheme.
- Consider how professional the listing looks. After all, anyone can choose to sell a property on the internet, but the listing will fall through if the regulations aren’t adhered to. There should be contact details for the person selling the property and you should be able to obtain enough information to check the property on the Land Registry.
- Look into the additional costs. If the sale is legitimate, there will be information on what happens with charges such as stamp duty if you win. If not, this could leave you with a bill of thousands, especially if you already own a home.
Also, keep in mind that even with a legitimate raffle, the odds of winning can be small.
If you’re hoping to become a homeowner, you should continue saving up for a deposit and shop around to ensure you can secure the best mortgage deal.
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