House Raffles: How do they work and what happens if you win?
Entering a raffle could seem like an attractive option to many but is it really a realistic way to get on the property ladder? Here, Sarah Edwards, of Beyond Law Group’s specialist conveyancing practice, Beyond Conveyancing, discusses the growing trend in house raffles, how they work and what to watch out for if you’re considering entering.
Property raffles have become increasingly popular over the last couple of years. With house prices reaching record highs and the average UK house price sitting at just over £265,000 in June 2021 you can see why. The average price for property in Greater Manchester alone stood at £221,452 in September 2021, compared to £271,351 in Cheshire according to Zoopla.
How do they work?
Property raffles have to be run as a competition rather than a lottery because running an unauthorised lottery is an offence which could lead to up to 51 weeks in prison and a £5000 fine. They are usually classed as prize competitions which are based on skill or knowledge, meaning you purchase a ticket and answer a question to enter the draw, with only correct answers counted in the ticket draw. The ticket prices can vary from as a little as £2 up to £20 per ticket, although sometimes there is a free entry route available as well.
Essentially, the property owner will require a certain number of tickets to be sold to raise enough capital to transfer the property to the winner. This means the more tickets required (usually those at the lower end of the ticket price spectrum) the smaller the odds are for winning. Some platforms have an upper ticket limit, unlike when you place a bet through a bookmaker, the odds are dependent on the number of tickets sold so you won’t know what your odds of winning are until the draw closes.
What if the required number of tickets aren’t sold?
If the raffle doesn’t sell enough tickets to cover the cost of the property, the raffle operator will either extend the draw or instead offer a cash prize. This will be a percentage of the actual ticket sales (after the raffle operation has taken a cut for their own expenses/profit) and the amount itself will vary, depending on the amount of tickets sold.
It is therefore important that entrants read the terms and conditions carefully and understand this when they enter the draw as the prize they win could end up being a lot lower in value than they were expecting. Would you have purchased the tickets in the first place if you had known the prize you would win would be substantially less?
What happens if you win?
Although you may have just won a dream home, before deciding where your furniture is going to go, it’s important to consider the long-term output required on a property and whether you will be able to afford the upkeep. You should consider things such as:
- Conveyancing costs – is the owner going to cover these or will you have to pay your own.
- Also consider the conveyancing costs and estate agent fees that you may incur if you choose to sell the property on.
- Regular bills such as utilities and phone/internet, council tax
- Tax implications
- Maintenance and repair costs
It is also probably the case that you don’t know anything about property and have not visited it before winning the competition. You may therefore want to instruct a survey, just to ensure there are no major issues with the structure or condition of the property. This will also give you an idea of anticipated repair costs.
As they are usually designed as prize competitions, they are not regulated by the gambling commission. Whilst some raffles have successfully transferred a house to the winning ticket holder, there are many raffles that fail to meet their targets and instead offer a lower value cash alternative. Always check the terms and conditions before entering a competition/raffle and do your research.
By Sarah Edwards