What is a house raffle?
House raffles offer the opportunity to win a desirable property simply by buying a relatively inexpensive raffle ticket. 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. One lucky winner will then get to win the highly desirable property for a fraction of its market value.
Where did house raffles come from?
A £1million Devon estate was famously the first UK 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 winning a dream property for a few pounds is often enough to attract a large number of entries. Many property raffles are also now run in partnership with charities, adding an extra motivation for people to buy tickets.
Pros and cons – the winners and losers of house raffles
Raffle success and charity donation
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. 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.
“A living nightmare”
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.
There have since been numerous cases of homeowner property raffles failing to sell enough tickets to cover the cost of the property and being abandoned.
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.
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?
Omaze.co.uk is probably the best known property raffle website, but their business model means they buy the properties they raffle off though, rather than raffling them on behalf of owners.
Most people who want to raffle their property will create their own website to promote their property raffle.
What are the alternatives to a property raffle?
House raffles are certainly a novel way to sell a property. there are undoubtedly some success stories, but there are also many cautionary tales. If you’re considering a property raffle, the most important thing is to make sure you’re aware of the legalities so you don’t fall foul of the rules and find yourself in trouble.
If you’re worried about the risks of a property raffle, but still want to explore different ways to sell, there are a couple of alternatives:
