Property raffles are when people can purchase tickets in the hope that they might be the winning ticket; the prize is a property. These can be a way for someone to purchase their dream home for the price of a raffle ticket.
What is a property raffle?
A property raffle, like any other type of raffle, works by buying tickets with a chance to win a prize. In this case, the price is a house! The more tickets you buy, the better your chances of winning. After all the tickets have been purchased, the property seller will choose a winner.
It benefits the seller, as they get to sell their house without paying estate agent fees, and it benefits the buyer who gets to move into a home for the price of a raffle ticket.
Winners of the raffle will also have their stamp duty fees included in the price. Also, if they are able to sell their current house immediately, they may also be able to avoid paying Capital Gains Tax.
What is the purpose of property raffles?
Property raffles open up the chance for people to live in properties for the price of a raffle ticket. These could be expensive penthouses in the trendiest parts of the city or even country estates. House raffles are often run with a certain demographic in mind, for example low-income individuals who would never be able to afford that type of property ordinarily.
Sellers often choose to raffle their home if they are having trouble selling it. Rather than your run-of-the-mill, three-bedroomed, semi-detached home, these tend to be luxury properties. Having a unique property, although it may seem great, can make it very difficult when it comes to selling – the market value tends to be far higher than most people can afford. In some cases, these are probate properties that have been inherited and that the seller wants to get rid of.
Thus, property raffles can be a match made in heaven for those desperate to sell and someone wanting to fulfil their pipe dream of living in a truly unique luxury property.
What To Consider Before Selling A Home in a Property Raffle
Selling your home via a property raffle comes with many things to think about. Before going ahead, you will need to seek legal advice to make sure that everything is permissible. In 2007, The Gambling Commission released a warning suggesting that property raffles which are improperly organised can go against certain gambling laws; this is known as illegal lotteries.
Legally, the act of buying a ticket to win from a draw is classed as a lottery. That means that for those looking to sell their house through a raffle, they will need to follow strict regulations and apply for a license from the Gambling Commission. However, this is a legal grey area. Some people choose to advertise their property raffle as a “competition”. Adding the question and answer element into the raffle, for example “What year was the property built in”, before purchasing a ticket, means that it can be classified as a competition rather than a raffle. This allows sellers to bypass the Gambling Commission legislation.
The Gambling Commission also state that property raffles should not just be for financial gain; this means that by law, some of the money should go to charity. The difficulty here is that property prices are very subjective and sellers could be profiting from the amount of raffle tickets sold. They could sell more tickets than the property is worth and give the surplus money to charity.
Although raffles are legal, if sellers are found to go against the rules laid out by the Gambling Commission, they could face a fine of £5,000 ad up to 51 weeks in jail.
