Raffles to win a house have become all the rage these days. In fact, the process isn’t just limited to houses as people have started running them for everything from tickets to see gigs, cars, clothing and so much more. But, the houses are the biggest appeal, for sure!
The process is pretty simple and works in the same way that any other raffle would occur. You simply buy your ticket and if your ticket is pulled out the ‘hat’, then the house gets signed over to you. We’ll go into more detail about how these competitions work, but first, let’s see the ones currently running:
Why do People Run These Raffles?
One of the main things that people run these raffles for is that the houses that are on offer are usually only marketed to a certain demographic of people, often dictated by budget. For example, lots of people would dream of living in a £1 million mansion in London, but the reality is that not many people are able to afford to do so.
The raffle will allow you to buy tickets at the fraction of the cost of the house. We’ve seen them as little as £5 per ticket and the house worth £1million+, which means that you could potentially get the house of your dreams for just £5 investment.
Like all raffles, the more tickets you buy the higher the chances that you will win. You will find that most raffles wont have an upper limit on the number of tickets that you buy, meaning you can have as much or as little chance as you desire. But, on the flip side they will have a minimum number of tickets that need to be sold before the house gets raffled off. This will allow the seller to guarantee a certain number of tickets and essentially guarantee the minimum price that they will receive.
What’s in it for the Seller?
The person that is raffling the house, as stated above, is able to set a minimum number of tickets that need to be sold before the raffle is drawn. This means that they know exactly how much they will get for the house before it’s essentially sold.
Let’s run through a quick example of a current raffle that’s running online. We won’t mention the house, but the process is the same.
The 5 bedroom house in Scotland has been valued at a £625,000, but the owners have admittedly struggled to sell the house given it’s remote location and the area it’s in. People in that area generally don’t have an awful lot of money and whilst people love the house, they have stated it’s too expensive.
Their raffle starts at just £5 per ticket and they will be waiting until they claim 250,000 tickets that have been purchased. So, the maths works out at £1,250,000 worth of raffle tickets, almost double the original value of the house. Out of the ‘kindness of their hearts’ they have also stated they will be giving £25,000 to charity once the sale goes through, but even after taxes and fees, they are still going to be left with a tidy profit at the end of the day.
It may seem like the seller is getting an extraordinarily good deal, which they are, but you have to remember that people are potentially going to be getting a £625,000 for just a £5 raffle ticket, which is going to be an even better deal for the winner. Whilst it’s a unique way of selling a house, it works out well for both the seller and the winner. But not so great for those who entered and lost.
It is worth noting that in the above example they have a big mark up on the house, but this isn’t always the case and often you will find that potential buyers will only raffle enough tickets for the value of the house. Either way, if you are purchasing the house, it doesn’t make an awful lot of difference, providing that they are willing to cap the maximum number of tickets sold. If this isn’t the case then the chances of winning will reduce with every addition ticket that is sold.
‘Investing’ in these opportunities
There are some sites that have been set up regarding investing in these tickets in order to win properties for cheap. Whilst this is all well and good if you win, there is no certainty and the variance involved with these types of promotions is huge.
From an investment opportunity, it’s never really going to be a viable option, especially long term. But the flip side is that you only need to win one house to make a huge profit and then make it all worthwhile. So if you enter, don’t rely on winning.
Is it legal to raffle a house?
There are a few grey areas surrounding these types of raffles, mainly to do with how they are conducted. You see, to simply allow people to buy a ticket and then draw the winning ticket is effectively classed as lottery. For this to occur, the person running the raffle would essentially need to apply for a lottery license from the Gambling Commission who then will only allow them to claim this should they meet the criteria.
One way that people have been getting around this is by promoting the raffle as a competition. A recent prize raffle that occurred on a Lancashire Mansion owned by Dunston Low, required the person buying the ticket to answer a question about what period the house was built in. This essentially made the raffle a competition and meant they didn’t need a license to operate as a lottery.
The massive rise in these types of auctions has prompted the Gambling Commission to take note and look at cases on an individual basis. At the minute, the process is still legal, but we would expect that there are tightening of the rules moving forward.
One stipulation that is required is that people aren’t able to form these auctions to make personal gain. They must make contributions of profit to charities in order to still class them as raffles or competitions. But, again, as the value of a house is still fairly subjective give or take depending on your area, this can be worked around with people looking to get the maximum value for their homes and then work that into the terms on offer.
It’s worth noting that people who are found to be in breach of these laws and terms will face a £5,000 fine and up to 51 weeks in jail.
What do I Need to do in Order to run a Raffle?
It’s worth noting that running these raffles is (at time of writing) perfectly legal, but you need to make sure that you go about it in the right manner. Our first bit of advice would be to not get too greedy on how much money you want to take. In theory it shouldn’t over the value of your home, but you will need to factor in costs and legal fees within this as well.
We’d also make sure that you weren’t running it as a lottery. So, you need to make it into a competition, making people have to answer a certain number of questions. We spoke earlier in the article about someone asking people to answer the question with what period of property the house is, along with making their raffle purchase.
If you fail to run it as a competition, then you will need to contact the Gambling Commission and apply for a license.
Finally, we would suggest that you need to be as transparent about the raffle and what people are set to receive as possible. Get some legal advice on proceedings and draw up terms and conditions. You could even contact the Gambling Commission directly with your plan of action who will then be able to help you and make sure you avoid any issues or worse, legal action after the event.
Famouse House Raffle Examples
Below are some examples of properties that are currently running or have already run with raffles attached, including details of the house that started it all.
On this site you are getting the chance to win a stunning house based on the outskirts of Manchester. Melling Manor is the East wing of the former Melling Hall and is a 6 bedroom dwelling. The house comes complete with ballroom, drawing room, dining room, cinema room, family bathroom, contemporary kitchen and huge gardens.
The draw was set up to run as £2 per ticket, with the prospect of selling 500,000 tickets in total. The house has ben valued at £845,000, but the overrun of tickets is set up to cover legal fees and stamp duty. However, even after £1million worth of tickets have been sold, it’s thought they are going to come out with a tidy profit!
The winner was Marie Segar of Warrington, who was contacted within 15 minutes of the draw taking place using a random number generator over a 6 month process. Donations as a result of the raffle were made to St Johns and NYAS.
One of the on going offers that is currently running is that of the Knightsbridge flat raffle in London. The raffle is to win the flat, which comes fully loaded with bedroom furniture, bunk beds, kitchen alliances, sofas, coffee table, dining table, TV and basically, 100% ready to move into.
Tickets are on sale at £5 per go and with it you are required to answer 1 trivia question to gain entry. The flat was valued at £995,000 and with it they looking to sell 300,000 tickets. But, with the raffle they are actually looking to get nearer tot the 500,000 mark in terms of tickets and then donate any profits from tickets over 300,000 to homeless charities such as Shelter, Crisis and Centre Point.
As an additional sweetener to the deal they are also including a ‘Live like a Lord’ competition where if you buy 4 tickets then you get 1 entry into this offer as well. The raffle is to win a two nights stay in the apartment, along with dinner at the Montpeliano restaurant, jazz buffet at Harrods and then cocktails with the owner at one of London’s many iconic landmarks. On top of that they will also issue you with a fully fledge title as a Lord or Lady that you get the legal right to use for the rest of your life.
The First House Raffle
It’s widely believed that the first ever raffle of this kind took place on a Georgian house based in Eat Yorkshire. The house was up for sale for over a year, valued at £650,000, but failed to sell through traditional methods in 2007.
The owners stated that they were staggered to see the value be so high given that 24 years previous they had paid very little for it. But, as the house failed to sell they looked at alternative methods and decided to raffle the house off instead.
The raffle was set at £60 per ticket and limited it to 25,000 tickets, coming out a whopping £1.50mil. They did state that they would give a significant amount any profit that was made the International League for the Protection of Horses.
As a side note, the house is now back on the market with an asking price of £525,000.