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3 Jul 2019

London house raffle finally closes one year on: will anyone win the property?

Will this be the UK's first successful property raffle?

A raffle to win a £650,000 south London property closed on Sunday, a year after its original deadline - but the company that ran the competition still hasn't confirmed if anyone will actually win the home.

Despite housing raffles becoming increasingly popular in recent years, no one has yet been able to sell enough tickets to warrant giving the winner the actual property. Instead, only cash prizes for much smaller sums have been handed out.

Which? explains what's happened with this housing raffle, when we'll find out who's won, and why UK housing raffles have so far proved so unsuccessful.

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Will anyone win the property?

The most recent competition, run by a company called Raffle House, closed to new entrants this weekend. Some 120,000 tickets needed to be sold to award the house as the grand prize.

Unfortunately, no one knows yet whether this target was reached. When we asked the CEO of Raffle House, Benno Spencer, he said the company was 'still analysing and collating' the number of tickets sold.

The draw will be concluded within 21 days of the competition's closure, and a further 21 days will be allowed to contact the winner, before moving on to a runner-up - so we might not find out the ultimate conclusion of the raffle until mid-August.

Alternative prizes

If the required number of entries hasn't been met, there will still be a prize draw. However, the winner will receive a cash prize instead of a house.

Alternatively, the winner may still bag the property, but without the 'discretionary prize bonus'. This is the extra sum of £42,000 that could be due if the winner is liable to pay stamp duty land tax, plus £3,000 for ground rent, council tax and utility bills, and up to £1,500 to cover the winner's legal fees.

Winning the house, without the bonus, could land the winner with a hefty bill.

This uncertain end comes after a 14-month competition that has been beleaguered by delays and even a run-in with the Advertising Standards Agency (ASA).

Prize draw delays

First launched in April 2018, the Raffle House competition was originally set to close on 30 June 2018, with a target to sell 150,000 raffle tickets for £5 each.

A few weeks before the original draw was scheduled, the closing date was extended to 25 November. Five days before this deadline, the date was pushed back again to 30 June 2019 - a full year after the original cut-off.

In a bid to boost tickets during the remaining seven months, entrants received several promotional emails urging them to buy more tickets, with extra incentives such as free tickets, a trip to Iceland and refer-a-friend offers.

At the end of April, the ticket total required to win the property was reduced to 120,000. Yet, with just a month to go, emails were still being sent to entrants to say 10,000 entrants were still needed to make the target.

Advertising complaints

The competition closed just days after the Advertising Standards Agency (ASA) upheld two complaints against Raffle House.

The first said the competition was unfairly administered because the method of entry changed partway through the promotion. The second stated the competition's closing date was absent in a Facebook ad.

As a result, Raffle House was told not to make any further changes to the competition's entry method, and that all future ads must include all significant terms and conditions, and a prominent closing date.

Raffle House says it is committed to fully adhering to the CAP code (the UK Code of non-broadcast advertising, sales promotion and direct marketing), which regulates non-broadcast advertising.

Are housing raffles ever successful?

To our knowledge, no British property has ever been successfully sold via a raffle.

A number of raffles have been shut down by the Gambling Commission after breaching its terms. Other competitions were unable to sell the required number of tickets to fund the property giveaway.

Instead, alternative cash prizes have been awarded, which are often worth significantly less than the property the winner was expecting.

One recent raffle to sell a £2m property in South Kensington - a prime area in west London - saw ticket sales generate just £227,000. It's been reported that the winner of the prize draw will receive just £53,500 of this, less than 3% of the property value.

When are property raffles breaking the rules?

All UK ads must follow the CAP code.

If you're looking to enter a house raffle, check whether it adheres to the following rules:

  • Awards the prize described, or a reasonable equivalent: if the number of tickets sold doesn't allow the company running the competition to give the property away, the cash equivalent must be deemed a 'reasonable equivalent'. Two recent housing raffles gave cash prizes that were significantly less than the 'luxury' homes on offer, and breached the code.
  • Sets a clear closing date: a closing date should be clear in all ads, and shouldn't be changed unless 'unavoidable circumstances outside the control of the advertiser make it necessary'.
  • Considers free entry: getting participants to pay to enter a prize promotion runs the risk of being considered an unlawful lottery, so there should be a way for people to enter for free, and it must be advertised clearly.
  • Makes T&Cs accessible: entrants should be able to easily access the promotional T&Cs throughout the competition, and they should not be changed unless the changes are pointed out to those taking part and wouldn't reasonably have put people off entering.

Where a property raffle breaches these guidelines, you may be able to complain to the ASA or the Gambling Commission.

Should you take part in a house raffle?

With first-time buyers facing rising property costs, housing raffles have become increasingly popular.

If you're thinking of entering, be aware that some companies run illegal competitions, pocketing the ticket money without giving any prizes at all. We would advise researching the listing, and carefully reading the terms and conditions before parting with any cash.

For those thinking about selling their home through a raffle, it's far from easy. Given scrutiny from the Gambling Commission and the ASA, sellers should seek legal advice before opting for this method.

But, as for Raffle House, this is not the end. Regardless of what happens with the property in Brixton, the company plans to launch a new competition to win a two-bedroom flat in east London's Whitechapel.

The property has been independently valued at £500,000 - but, as yet, no further information is known about how much tickets will cost or how many will be required to sell for someone to win the flat.