There’s been a spate of homes being put into raffles this year, offering the chance to own a property for a pittance.
New website rafflemyhouse.com is the first platform of its kind, enabling people to sell their houses using a raffle-style competition. To enter the raffle, you just need to buy a ticket for £1 and answer a simple question, and then the winner is chosen at random.
The multiple choice question to win the “beautiful, refurbished, extended three bedroom, detached, bungalow in a fantastic position with plenty of space” which is currently on offer is this: What is the most expensive property on the UK Monopoly board? A. Park Lane; B. Oxford Street; C. Mayfair.
A winner is chosen after 325,000 tickets have been sold. The seller receives £301,500 in cash, with the rest going towards a 3% website fee, legal costs, stamp duty and a £5,000 charitable donation.
A smart alternative?
The idea of raffling properties is not a new one. This year has seen a number of sellers putting their houses on the market using this method, including Kieron Walsh who is using a raffle to sell his £240,000 home in Salford, Greater Manchester.
He is selling tickets for £5 each, and entrants must answer three questions in order to qualify. He chose this alternative method to sell after struggling to close deals with buyers.
“We were getting to the point where we were just never completing,” he said. “People kept putting in other offers and gazumping each other, and then the closer I’d get to finalising something would happen. So I started doing some research and I decided to press ahead with this.”
In Bristol, a 17-room £1m house is also about to be up for grabs in a raffle, with tickets priced at £2.
“The house has been up for sale for a year but we just haven’t found the right buyer,” said owner Tricia Hamilton. “It’s very unique, which works well for such an unconventional sale.”
And in Lancashire, an £845,000 mansion was successfully raffled off through the sale of 500,000 tickets priced at £2 each, and applicants had to answer a question about the architectural period of the home.
Owner Dunstan Low has since been asked to help market a castle, a set of terraced houses and luxury flats.
“It’s basically like crowdfunding,” he said. “If you don’t raise the target, you revert to a cash prize. So many people have got in touch to say that the top end of the market is stagnant and this technique is a way to get round a difficult housing market.”
The legal side
Technically, raffles, lotteries and tombolas can only be used to raise money for charity. House raffles must bypass this by adding in the element of skill to make them legal, hence the multiple choice questions employed by most sellers.
The Gambling Commission has issued warnings that those who do not stick to the rules could end up with a hefty £5,000 fine, or even 51 weeks in jail.
Another requirement is that a number of free entries must be made available – on rafflemyhouse.com, you can enter for free by post.
Although stamp duty is covered through the sale of the tickets, anyone who wins the house and then decides to sell it might be subject to capital gains tax if the value of the property increased since the time of the raffle and if the home is not your primary residence.
In terms of ownership, bidders must be careful to ensure all the correct paperwork is in place.
“We have signed binding contracts with the seller and have made sure he is the rightful owners and carried out searches,” said Raffle My House managing director Ricky Jhuti. “A solicitor has confirmed the seller owns the land registry title.”
Should I do it?
Experts warn that it is vital to ensure you have done the research before you take the plunge in a house raffle.
“Please remember that there are some important legal constraints that could impact on your plans,” said property expert Henry Pryor. “Speak to a lawyer at the earliest opportunity to ensure that your plans will be legal and binding on any eventual winner.”
“Raffles, like lotteries, are fun but they aren’t a serious way to sell your home. The internet will forever link your efforts to the property and future buyers will not always be as impressed that their home was a prize.
“If you are successful then it can be lucrative but running a successful raffle is complicated and you should get advice before embarking on it.”
Buying a house blind is never something that experts would recommend, and with a house raffle you are potentially going to end up with a house you have never seen, with all the associated problems this could throw up.
However, for many, the lure of being able to own a property for just a few pounds will far outweigh the negatives.
