The Raffle House prize draw to win a London home has been delayed by several months after insufficient ticket sales – a problem that has dogged house raffles around the country.
Which? looks at what this means for those who have already bought tickets, and whether house raffles are a fun way to house-hunt or a waste of money.
Why has the house raffle draw been extended?
New property platform Raffle House has been selling tickets to win a one-bedroom flat in Brixton, for £5 a ticket, for the past couple of months.
The prize draw was originally set to take place at the end of June, but entrants were sent an email this morning to inform them that this has now been delayed until 25 November.
In order to be able to sell the property and provide three runner-up prizes of £1,000 each, Raffle House has to sell 150,000 raffle tickets – and this target has not been met.
The terms and conditions of the draw give Raffle House the right to extend the date of the prize draw, as long as the new closing date is no later than six months after the originally specified date.
CEO of Raffle House Benno Spencer told us that, as this is a new venture, there was always going to be a period of time where Raffle House would be unsure of how long it would take to sell the requisite number of tickets.
He expressed confidence in selling enough tickets by the November deadline.
- Find out more: Could you buy a £650,000 home for a fiver?
What if the tickets aren’t sold?
If, by the new closing date, the minimum number of entries is not met, then the competition will close and there will still be a draw.
In this case, the chosen winner could receive a cash prize instead of the property. This is likely to be less than the property value.
Alternatively, they could still receive the property, but without the ‘discretionary prize bonus’. This refers to an additional sum of up to £42,000 that could be paid out in the event that Stamp Duty Land Tax is payable by the winner.
In this scenario, the winner would have to pay the stamp duty on the property they’ve won.
According to the website, similar properties in the area have sold for between £500,000 and £600,000 – so, on a conservative estimate, you could be on the hook for up to £15,000 in stamp duty (or £30,000 if you already own a home).
How often do house raffles fail?
There is a lengthy history of raffles in the UK that have disappointed ticket buyers’ expectations.
A spot-the-ball competition in Berkshire for a £3.5m family home was withdrawn, and the money refunded, after insufficient tickets were sold.
One raffle in Durham failed to sell 10,000 tickets at £5 each for a £43,000 property, and gave away a cash prize of £7,000 instead.
While winners aren’t left empty-handed, taking home a much smaller cash prize is not quite the same as winning your dream home – and some may not have entered at all for such a comparatively low winning.
What’s the future of housing raffles?
Property raffles are becoming increasingly popular, as many first-time buyers struggle to get on the property ladder.
While it may be a chance to secure your dream home for just £5, there are some companies falling foul of gambling rules – something the Gambling Commission has already expressed concern about.
In theory, if a raffle is withdrawn because of legal complications or failure to sell tickets, you should be entitled to a refund of your money.
But be wary of unscrupulous operators who may disappear with the proceeds.
If you’re unsure whether or not you’d like to enter a property raffle in future, we’ve come up with some tips to bear in mind.
While these aren’t legal guidelines, they could help you to decide whether to buy a ticket:
- Research the listing – if the property is being listed by a company, check its credentials with the Financial Conduct Authority. If it’s an estate agent, it should be signed up to a redress scheme.
- Gauge how professional the listing looks – there should be contact details for the person selling the property, and you should also be able to check the property on the Land Registry.
- Check additional costs – there should be information on what happens with charges such as stamp duty if you win.
- Read the terms and conditions carefully – make sure you understand what prizes are offered if too few tickets are sold, and whether you’re entitled to a refund if the raffle is called off.
Aspiring to buy a home?
If you’re hoping to become a homeowner, a raffle can be a bit of fun – but you should continue saving up for a deposit, and shop around to ensure you can secure the best mortgage deal.
Our guide for first-time buyers tells you everything you need to know about saving a deposit and applying for your first mortgage.
For expert advice on the best ways to save and schemes that might help you buy quicker, you can call Which? Mortgage Advisers on 0800 197 8461 or fill in your details below for a free callback.
Your home may be repossessed if you do not keep up repayments on your mortgage. Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.