Property raffles first gained popularity in 2008 when many homeowners struggled to sell their properties during the recession. They gained media attention in 2017 when a woman won an £800,000 Lancashire country manor after purchasing a £2 raffle ticket, and again in 2020, when another £2 raffle ticket resulted in a £545,000 “dream house” win.
These kinds of headlines strike a chord with first-time buyers and other house hunters who are struggling to get on, or move up, the property ladder in a competitive housing market.
But, how easy is it to sell your house by raffle in the UK? Is it legal? Will you make more money than selling on-market, or do you stand to lose everything?
What is a House Raffle?
A house or property raffle is an alternative to selling a house on-market with an estate agent. They work in the same way as any raffle. Interested parties have a fixed period to buy a ticket or tickets, often for just a few pounds each, and on a selected date, a winner is drawn. This means the winner could bag themselves a dream property for less than the price of a coffee. Most house rafflers specify a minimum ticket-sales figure. If this is not reached, the winner will receive a cash prize, rather than the house.
“Win a House” prize draws and competitions have become increasingly popular on social media platforms such as Facebook and Instagram in recent years. If you’re struggling to scrape together a deposit or earn enough to qualify for the mortgage you need, these ads can be hard to resist!
Is it Legal to Raffle a House in the UK?
Raffling your house is not illegal in the UK, provided you adhere to the relevant gamblings laws and regulations. The UK Gambling Commission (UKGC) will shut down any raffle that it deems an “illegal lottery”. In the eyes of the law, selling tickets for a prize draw is tantamount to running a lottery and is illegal unless you have applied for a licence from the UKGC.
“Prize competitions” are not regulated by the UKGC, and successful house rafflers typically operate via this route to avoid falling foul of gambling laws. What’s the difference between a prize draw and a lottery? The former requires ticket buyers to exercise some form of skill or judgment to qualify for entry, for example, answering a simple multiple-choice question.
The Advertising Standards Agency (ASA) may also step in if it feels that the marketing activities surrounding a house raffle constitute misleading advertising that contravenes the Committee of Advertising Practice (CAP) code. If the ASA suspects that a property raffle breaks money-laundering regulations and redress rules, it will refer the matter to the National Trading Standards Estate and Letting Agency Team (NTSELAT).
It’s very easy to slip between the cracks of regulation when running a property raffle, so it’s a good idea to seek some professional legal advice to make sure you’re playing by the book and won’t fall foul of legal action or penalties.
Why Sell Your Home via Raffle?
There are many reasons someone might choose to sell their house via a non-traditional route, such as a property raffle. Common reasons include:
- The property is extremely expensive, and finding a buyer would take a long time because few people have the means to purchase it.
- The property has problems, such as high maintenance costs or subsidence, making it hard to sell on-market.
- The property is unusual or has a history that may put some people off, for example, the death of previous owners.
- The market is slow, and the economy is struggling; for example, there is a recession.
If you’re considering selling this way, do your research into how best to go about it and put things in place to avoid the common problems and pitfalls.
Download our guide “5 Reasons to Sell Off-Market” to learn more about alternative ways to sell your property
How Does a House Raffle Work?
Property raffles are generally organised by the homeowner who is keen to sell. There are some raffle competition companies too.
If you want to raffle your home, you will need to:
- Register your property raffle for lottery duty (which equates to 12% of the proceeds from ticket sales).
- Hire a legal professional to write sufficient terms and conditions and ensure that the raffle is legally compliant (or you could face a hefty fine).
- Set a deadline for ticket sales or the number of sales that must be hit before you close entries.
- Stipulate the minimum amount of ticket sales you need to achieve before giving the house away and specify alternative (typically cash) prizes if this is not met. If you fail to do this, you may be forced to give your property away for a song! Alternatively, you could include in your terms and conditions that tickets will be refunded if not enough are sold to enable you to raffle the house.
- Hold a raffle draw. There are several ways to do this. If you have built up a good following on social media, a live draw is a popular choice.
- Transfer ownership of the property to the winner. If you sell enough tickets to give the property away, instruct a solicitor to manage the legalities of transferring ownership to the winner and administer any additional prizes you included in the raffle.
Once ownership of the property is legally transferred to the winner, they are responsible for all the associated costs — utility bills, maintenance, council tax, etc.
Potential Problems When Selling Your House by Raffle
- You don’t sell enough tickets. The majority of property raffles are either shut down by the UKGC or result in a cash prize being offered because the number of ticket sales required to cover the cost of the house is not reached. If the latter happens, you will have spent considerable time, and possibly money, on marketing your raffle only to give most of the proceeds away and still have an unsold property, or worse, incur significant losses. Donna Prie raffled her £1.7m mansion in 2018 but only sold £250,000 worth of tickets, despite national press coverage. She awarded a cash prize and donated to charity, which resulted in a net loss of £31,500 when the cost of running the raffle was factored in.
- Being shut down by the UKGC. If your raffle is deemed an illegal lottery or violates gambling and advertising legislation in some other way, it could be shut down before you hit your target ticket-sales figure.
- Unexpected expenses. If you want to stand a chance of selling enough tickets to make your raffle a success, it will probably be necessary to spend a significant sum of money on advertising and marketing. No one can enter a raffle they don’t know about! Unless you’re a marketing guru, there will probably be mistakes made along the way — too much budget spent on the wrong type of Facebook audience or too little spent on local ads, for example. These costs can quickly add up and eat into your ticket-sale profits.
- Time-consuming admin. As well as marketing, a raffle creates a considerable amount of administrative work. From completing paperwork to ensure the raffle is legal to protecting entrant’s data and administering any prizes awarded, selling your home by raffle is not a simple task. It requires hard work, dedication and a lot of time.