Guide to property raffles
A property raffle may be an unusual way to sell a property, but it’s something that has become more common over the last few years. As getting a foot on the property ladder is becoming increasingly challenging for many people, winning a house through property raffles in the UK are an ideal way for aspiring homeowners to acquire a property that might otherwise be beyond their reach.
In this guide
- What is a house raffle?
- Where did house raffles come from?
- How does a property raffle work?
- Who uses property raffles to sell their homes and why?
- Pros and cons – the winners and losers of property raffles
- What you should consider before you raffle your house
- What are the legal guidelines for a house raffle
- What property raffle site should I use?
- What are the alternatives to a property raffle?
What is a house raffle?
A relatively new way to find a new owner for your property, a house raffle allows members of the public, who may otherwise not be able to afford the property, to buy a raffle ticket that gives them the chance of winning it. Tickets for previous UK house raffle competitions have ranged in price from just £2 up to £1,000.
The idea is that the homeowner will sell enough raffle tickets to cover the cost of the house, and one lucky winner will get to own a highly desirable property for a fraction of its market value.
Where did house raffles come from?
A £1million Devon estate was famously the first home to be won in a property raffle in 2008. Since then, the concept has steadily gained momentum.
How does a property raffle work?
The premise of a property raffle is very similar to any other type of raffle. Those interested in winning the property will be required to purchase a raffle ticket. Once enough raffle tickets have been sold, the raffle organiser will pick a winner at random. The legal conveyancing process will take place and ownership of the property will transfer to the property raffle winner.
Who uses property raffles to sell their home and why?
Homeowners might consider a property raffle for a variety of reasons. Usually, homes included in property raffles are large, aspirational homes that an average house hunter would be unable to afford. Operating a property raffle immediately broadens your pool of potential buyers considerably. The idea of being in with a chance of owning a dream property for the cost of a raffle ticket is often enough to attract a large number of entries.
Pros and cons – the winners and losers of property raffles
One person who has benefitted from the house raffle trend is Dunstan Low. After lovingly restoring Melling Manor, a six-bedroom Georgian manor house, between 2011 and 2012, Mr Low was struggling to keep up with the mortgage repayments and needed a fast house sale. He tried to sell the property on the open market with an asking price of £845,000, but was unable to find a buyer, so to avoid repossession he decided to run a house raffle.
With tickets priced at just £2, and the option of a free postal entry, the competition attracted a lot of attention. By the time the house raffle competition closed, it had raised not only enough money to cover the cost of the house and all legal bills, but also enough for Mr Low to donate £40,000 to charity.
It sounds like a great way to ‘sell’ your property, and there have been several impressive success stories, but, unfortunately, there have also been occasions when house raffles have not gone to plan.
After struggling to find a buyer for their six-bedroom Wirral property, which had been valued at £725,000, Howard and Marie Lipsey decided to offer the property as a prize in a house raffle. They had previously seen media coverage of the Devonshire estate raffle that had been a success.
Unfortunately for Mr and Mrs Lipsey, the Gambling Commission raised questions about whether the raffle was legally viable and forced them to put it on hold, just weeks after it launched. By the time the Gambling Commission gave the Lipseys the go ahead to continue the raffle, interest in it had declined and they failed to sell enough tickets to make the raffle viable.
The couple had used the money from the initial ticket sales to finance the set up and marketing of the competition, and as a result were left unable to refund ticket holders. Mr Lipsey said this resulted in abusive emails and threats from angry ticket holders wanting their money back.
Mr Lipsey described the experience as ‘a living nightmare’, and said they have since had to draw up a contract promising to repay ticket holders when the house eventually sells, at a significantly reduced price, on the open market.
What you should consider before you raffle your house
A house raffle has the potential to be a great success, but it’s not without risks.
Before you consider a house raffle, ask yourself the following questions:
- How would you price the raffle tickets?
- How many tickets would you need to sell to make the raffle viable?
- What would you do if you did not sell the required number of tickets?
- Who will be responsible for paying the stamp duty, legal fees and other costs associated with a house sale?
You will also need to ensure you have a thorough understanding of the legalities surrounding house raffles to ensure you do not end up breaking the law.
What are the legal guidelines for a house raffle?
You will notice, if you start looking at existing house raffles, that they will require you to answer a question or participate in some other type of ‘competition’ element. This is because UK lottery laws make a straight raffle illegal. Would-be winners must participate in a ‘skills-based’ question in order to make the raffle legally permissible. Schemes that do not include a ‘skills-based’ test, that would prevent a significant number of people from participating in the competition, are classed as lotteries, and lotteries cannot be operated for private gain, ie. selling a property.
Which property raffle site should I use?
There are a few different sites that promote property raffles, such as omaze.co.uk and rafflehouse.com, but most people will create their own website to promote their property raffle.
What are the alternatives to a property raffle?
If you’re looking for a different way to sell your property, there are a few alternatives to selling via an estate agent, such as:
Property auction gives you a definitive end date to your property sale (much like a property raffle), but you know that date from the very start and you don’t need to promote a raffle and sell a certain number of tickets before the sale can take place. Where a property auction puts you at a disadvantage over a raffle, however, is that you don’t know what price you’ll achieve for your property until the auction has taken place, and around 30% of properties are left unsold after an auction.
Property buying company
Need a quick or guaranteed sale? A cash homebuying company can be a great option. Offering a completely hassle-free solution, a cash homebuying company will completely managed the sale through for you, from beginning to end, and can buy your property in as little as a week or on a date of your choice.
Find out more about:
- How does equity release work?
- How much do conveyancing fees cost?
- Selling a house with tenants
- Selling a buy-to-let property in 2023
- What is a buy-to-let mortgage?
- Landlord tax explained
- When’s the best time to sell a house?
- What is a down valuation?
- How to sell a house without an estate agent
- What to do if your house sale falls through