There are lots of different ways to sell your house in the modern day.
In the United Kingdom, raffling a house went through a surge of popularity at the start of the decade.
After all, for those who are tired of spending months waiting for a potential buyer to appear on the open market, it seems like the ideal solution.
So, what exactly is a house raffle? How popular at they – and is it legal in the UK? Keep reading to find out.
What is a house raffle?
House raffles give participants the opportunity to own a house by purchasing an inexpensive raffle ticket.
If thousands of people all buy a ticket, it may end up covering the value of the property – and one of the tickets will then be announced as a winner.
This idea has been explored by homeowners who are tired of listing their house on the open market. It can often take several months to find a suitable buyer.
In most cases, it is difficult to make a profit from a house raffle. Finding enough people to enter can be difficult because tickets will often need to be priced at £5 minimum. This gives each person a very low chance of winning.
For example, if your house is valued at £300,000, then you will need to sell 60,000 tickets at £5 each. This is no small feat.
Property winners may even dodge stamp duty fees. HMRC state that, for raffled homes, Capital Gains Tax is based on the open market value on the date of attaining the property.
This means if the winner was to sell their new home shortly after acquiring it there would likely be zero Capital Gains Tax to pay.
Speak to a tax adviser for more guidance on this.
Can I raffle my house legally in the UK?
Yes, raffling a house is completely legal in the UK. That is assuming that the necessary paperwork has been created and that no crimes are being committed.
You should be able to find a conveyancer that has experience in this area.
The Gambling Commission released a warning in 2007 that some property raffles have gone against gambling laws. These raffles are known as illegal lotteries because the act of selling a ticket to win from a draw is, in the eyes of the law, classed as a lottery.
Therefore, applying for a license from the Gambling Commission and following their rules is crucial.
There are ways of altering property raffles to avoid a lottery. Some methods include donating money from the property sale to charity. Others involve asking people to answer a question before purchasing a ticket, which turns the lottery into a competition.
It should be remembered that the world of house raffles is still new and has grey areas. Speak to a solicitor if you want to be reassured that everything you’re doing is fine.
How common is raffling a house?
According to the latest figures, there were 93 house raffles in the UK in 2020, followed by 108 in 2021. The popularity of raffles declined from this point though, with only 34 house raffles in 2022 and 29 in 2023.
This declining popularity is likely due to so many participants not receiving any payback on their entry. Indeed, even for those who have won the raffle, they rarely receive the house.
Instead, they have to settle for a small cash price (often due to some clauses in the small print).
Is a raffle different to an auction?
Yes, a raffle is different to an auction. In an auction, the highest bidder wins and takes ownership of the house.
This is not the case with a raffle, whereby everyone buys a ticket at the same price, and it is therefore total luck as to who the winner is.
Alternatives to a property raffle
Homeowners are looking for quick ways to sell their house, as the open market becomes far too slow.
Cash buying companies are an excellent option, as they enable you to sell your house within 7 days in any condition.
This saves you from all the time and effort involved with gathering thousands of people to take part in your raffle.
Auction houses, as mentioned above, are a valid option as well.
Rather than your house going to a lucky winner, it will be sold to the person that bids the highest on it. Once again, this saves you from having to find thousands of willing participants.
Some people have considered listing a house on eBay or Amazon as being an alternative, although this is not accurate.
Although you can use these platforms as advertising tools, deals cannot be pushed through these platforms. A bid on one of these sites does not represent a legally binding agreement.
