Selling your home can be a long process, involving viewings, waiting for offers and then dealing with the conveyancing. For some people, raffling their house has offered a quick alternative.
The idea is that tickets are sold for a modest sum, often between £5 and £25, with the raffle winner taking the property, while the organiser hopefully raises enough money to cover the value of their home.
Is it legal?
It is illegal for a property raffle or lottery to be run for commercial gain or profit. A raffle or lottery can only be carried out to benefit charities or other non-profit organisations.
You will need to obtain a lottery licence from the Gambling Commission and comply with their rules. You would also need robust terms and conditions in place.
Where Gambling Commission rules are not adhered to, a raffle will be deemed as an illegal lottery. Penalties for conducting an illegal lottery include fines and even prison.
If you want to raffle your home, for the process to be legal it will either need to be a free draw or a prize competition or you would have to give the profits to charity.
By asking entrants to answer a question, the process may be classed as a competition, but the rules state that the process should exclude a sizeable portion of applicants for it to be legally classed as a competition.
The tax situation in respect of income from a raffle can also be uncertain, with a risk that HM Revenue & Customs will charge Income Tax and National Insurance on the amount made.
Selling tickets
It is crucial to sell enough tickets if you wish to avoid losing a substantial amount of money or even ending up unable to pay off your mortgage.
You need to consider what you will do if you do not sell sufficient tickets, which could include refunding everyone who has entered.
Only an estimated 19% of raffles go on to give away a top prize and organisers have faced abuse and threats where they have not gone through with handing over their house.
Others have lost considerable sums in fees for arranging the raffle and dealing with associated expenses.
The Advertising Standards Authority can also object if the publicity materials do not meet their criteria.
For most people, raffling a property or running a prize competition or free draw is not recommended, with plenty of those who have attempted it ending up substantially out of pocket.
Buying raffle tickets
You should approach property raffles with caution. They may be stopped by the Gambling Commission or the prize withdrawn by the organiser.
If you do win, you will need to pay Stamp Duty on the property, unless this has been included in the prize.
If you would like to speak to one of our expert property lawyers about selling or buying a home, ring us on 0333 305 5189 or email us at info@lpropertylawyers.co.uk
